Buyers: Get into Financial Shape

What can buyers do at this time to make purchasing a home a reality? Actually there are many items buyers can do immediately to get themselves in better financial positions. The real estate market, as well as the mortgage market, has taken a turn and as a result many companies originating loans have tightened loan requirements.

In the mortgage industry we are seeing an increase in foreclosures with home owners defaulting because of rising mortgage payments. Adustable rate mortgages and interest only loans made it easy for buyers with lower credit scores and more dept to extend their purchasing power.

The tightening of loan requirements has effected many people’s, including myself, to make the jump into home ownership. If you are like me, with outstanding students loans as well as a fairly new truck, dept to income ratio is slightly too high to get a prime loan. In addition there are some minimal credit card debt, an okay credit score, neither horrible nor excellent, and it all effect financial ratios in the home loan equation.

So I made the decision to get into better financial shape. This meant moving out of my downtown Kirkland apartment and back to Marysville. I am now renting a room from a friend who just bought a 3 bedroom, 2 bathroom new construction home. Doing so, I lowered my rent dramatically which will enable me to eliminate personal debt.

Lending institutions are going to be looking at more than just how to get you into your home. They are going to be looking at your ability to pay the financed mortgage and how likely you are to default, reducing their own risk. What are some of the items lending institutions are looking for: low debt to income ratio, total available credit to total used credit ratio (needs to be low meaning a $1500 credit limit on a Nordstrom card with a balance of $1490 will negatively affect this ratio) and proof of stated income.

Documentation, proof of stated income, will be the deciding variable to your home financing equation. Proof of stated income shows the lending institutions that 1. You are stable 2. You are reliable 3. That you are less likely to default on a loan. So what is an effective way to get into better financial shape?

Start a Schedule
– Use a calendar to note payment dates as well as pay day dates
– Pay bills first leaving grocery money
– Avoid any unnecessary spending

And Most Importantly
– Stick to the schedule

By following a plan buyers will be able to watch themselves move into better financial shape in a relatively short period of time. Now this is easier to accomplish with dual incomes but some of us do not have that luxury making even more important to follow a schedule. A home or condo is a great way to create an investment and get used to the throws of home ownership.

In the mean time start watching the real estate market. How? Click on the property search at the top of the page and establish your search criteria. Next save your search, go through the registration process, and get properties emailed to you directory. It is simple, fast and effective. This way when you are ready to purchase you will know exactly what you kind of place you want and can afford.

Also, take this time to evaluate what attributes, type and style of home you like. Ask yourself questions like: Is hard wood important? How big of lot and/or home sq/ft will I need? How important is that third bedroom or that extra bathroom? Narrowing your search will make finding the home of that fits your needs and budget much easier and enjoyable. Then login into your account and change the fields to reflect any changes that you think of that way your receiving the most targeted listings.