10 Tips to Help Finance Your New Home
Financing homes in Prosper TX is a straightforward process if you follow the right steps.
Pay your bills on time
As soon as you decide to purchase a new home, make sure you pay all your bills on time each month. Paying your bills on time helps raise your credit score. A higher score will make you more appealing to lenders and will get you a better interest rate on your mortgage.
Pay down debts
Mortgage lenders will calculate your debt-to-income ratio when deciding how much money to loan you for a new home. Having less debt and a strong income will get you better interest rates and a larger loan. Your total debt including mortgage, property tax and other housing costs should be less than 36% of your income.
Get on a budget
Track your expenses for several months on paper or in a budgeting app. Look for ways to cut back on unnecessary spending. Put that “found money” toward your down payment or closing costs. Knowing your actual income and expenses will also help you determine how much you can afford to pay for a mortgage and housing costs each month.
Increase your income
If your budget is still tight or your debt-to-income ratio is too high, look for ways to earn more money. Ask for a raise, apply for a promotion or take on a side hustle. If you or your partner is employed part-time, see if you can work full time at the same job.
Don’t change jobs
One thing you shouldn’t do when planning to buy a new home is change jobs. Lenders want to see at least a two-year work history at one company. If you’ve recently changed jobs, you may want to wait a year or two before applying for a mortgage.
Check your credit reports
You can get free copies of your credit report once a year from AnnualCreditReport.com. Order your reports from all three reporting agencies. Look over them carefully to make sure everything on them is accurate. If you find any mistakes, contact the reporting agency right away.
Save a down payment
You can avoid the expense of private mortgage insurance, or PMI, by putting down at least 20% on your new home. You can get a mortgage with less down, but you’ll have a higher monthly payment.
Look for help with down payment
If your parents or other people are contributing funds to help you with your down payment, they must sign a paper stating that the money is a gift and not a loan. Borrowing money for a down payment will increase your debt-to-income ratio. Ask your builder or lender about down payment assistance programs and other incentive programs.
Research your loan options
Shop around and compare the different types of mortgages that are available to you. Most lenders offer 15, 20 or 30-year mortgages. You may also qualify for FHA loans, VA loans or first-time buyer programs.
Collect documentation
When you’ve completed the above steps, prepare for application process by collecting pay stubs, tax returns, bank statements and other documents to verify your financial situation. Now you’re ready to apply for a mortgage!
Use these tips to purchase a new home in Dominion at Brookhollow in Prosper TX. Dominion features two story single family homes with 4 or 5 bedrooms starting from the low $500s. Call New Home Sales Manager Renee Patel today at 214-619-3116 or 469-279-062 to schedule a tour and see available homes in Prosper TX.
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