What Do You Need To Do To Buy A House In Texas
Buying a home is amongst the things that most of us eventually do at some stage, but not many people know how to go about this task. You may already know that you will need to tour homes, find a good realtor and obtain a loan, but you may not be clued up on where you should be going or who you should be talking to about these things, or the order in which you should be doing each task.
This is why we have formulated a step-by-step guide to buying a home.
1. Make Sure Your Finances Are In Order
You might be thinking about house hunting, loan pre-approval, and a real estate agent, yet the steps to prepare to purchase a property actually begins many months or even a year or two before you can actually look at the appropriate mortgage rate.
You have to make sure you are financially ready. This will mean assessing your financial situation currently and making sure that it matches up to what a mortgage lender wants from a borrower. You also need to work out what is affordable for you and you need to save for closing costs and your down payment.
2. What Do Lenders Look For?
Below is a list of the standard requirements that you will need to match up to, in order to ensure your mortgage is approved. This is just a general guideline and it can vary according to the lender along with the type of loan they are prepared to offer:
- For conventional loans, your credit score should be 620 or higher, or 580 for an FHA loan.
- Your credit history must be good.
- You need to prove that you receive a consistent and reliable income.
- Your income-to-debt ratio must below 50%
If you are only matching up to the bare minimum requirements, it might be a good idea to first improve your score before you start applying for mortgages, as it can improve your chances of getting a better rate.
3. Work Out How Much You Can Afford
You first need to obtain pre-approval for your mortgage to find out the exact amount that you can spend on your home. Working out your budget on a monthly basis and what it will be once you have a mortgage can assist you when it comes to deciding on whether you are able to afford a house.
Today there are home-affordability calculators that provide an estimate on the amount you can afford to spend on a house along with what your payments might be every month. You might discover that your payments every month may be lower than what you are paying currently towards rent. However, homeownership does come with many other new costs. This includes the maintenance of your home, insurance, and taxes. You need to factor these into the overall costs.
Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you. Feel free to contact us or call us today! Click here to go to the next article in this series.