If you are struggling to become a homeowner, it might be time to really understand how your spending habits determine when, or if, that may happen for you. Being able to borrow money at a reasonable mortgage rate is key to giving you a monthly payment you can afford.  There is nothing worse than pouring all of your hard earned money into a house and not have extra income to decorate or fix up the house and explore your new neighborhood’s amenities. If you want to own a home, understand that your financial profile is the best predictor of that happening for you.

 

There are mortgage lenders who can help you borrow money to buy a home, but being eligible for a low-interest rate is the best way to obtain an affordable monthly payment. Interest rates are determined by these three basics:

  • Credit Score: Your credit score might be above average, but lenders usually think that anything below 740 carries some risk. This could mean your score isn’t high enough to qualify with that lender, for that product, in that neighborhood. A low score may lead to paying a higher interest rate. A high rate can make your monthly payment uncomfortably expensive.
  • Employment History: If your job history is short or unstable (less than 6 months in your current job) some lenders may not grant a loan until you have more time on the job. Stay on a job for as long as you can. If you must job hop, do so strategically. Higher salary, the potential for future promotions are good reasons to switch, but once you change jobs try staying 2 or more years.
  • Debt: The more debt you have, the greater the lender will securitize your financial information.  The more of your income that you have to use for paying off debt, the less likely you are to obtain a mortgage with a low-interest rate. A low debt-to-income ratio (DTI) is key to financing and is calculated by taking your debt obligations and dividing it by your monthly gross income. This rate will indicate to the lender that you will have enough extra income to take on the mortgage.  To keep your debt low, focus on only buying what you absolutely need, not absolutely want. There is a difference. If you need a house, then focus on paying down debt so you afford one.

A lender wants to lend money to people who are stable and therefore low risk. Lenders define stable as a higher credit score and a longer job history.

Bottom Line

If you want to talk in depth with someone who can help answer the question, “will I ever own a home,” you are in luck. Your employer provides the Advantage Home Plus homeownership program as part of your benefits package in order to make your life easier.  Our experts are up to date on the current mortgage loans and what you need to qualify. There is no need to go this alone, give us a call at 1-800-376-4603 or contact us at info@advantagehomeplus.com to let us help you reach your dream. Call us, we are here for you.