Important Financial Prerequisites for Home Buyers

Home BuyersThe home ownership process is not something that should be rushed. It requires proper planning, good decision-making, and financial stability. Without any of the three, you’re more than likely to run into more than just a few bumps in the road.

Down Payment

You can kiss your dream home goodbye if you don’t come up with a solid down payment. Unlike before, when homeowners could get away without having to make a down payment, times have changed to where the down payment has now become one of the most important steps in the home buying process. Additionally, lenders want security knowing that the buyer won’t just default when the times get tough.

Keep A Good Credit Score

The higher your credit score is, the better your interest rate will be when you take out your mortgage. This is especially important when it comes to financial stability. Even a meager one percent could mean thousands of extra dollars coming out of your pocket through interest. While you may be tempted to go out and purchase a home once you have the money, you might want to look to raise your credit score before making that decision.

Keep Your Debt-To-Income Ratio Low

Before lenders hand over all that mortgage money, they want to know that you’re going to be financially responsible with your payments – and if you can even pay it. This is why they look at your debt-to-income ratio to determine how your finances will look like once you take out that mortgage. It should be less than 43%, and chances are, if you take good care of your money, you shouldn’t have any problem.

Bio: Kuba Jewgieniew is the CEO of Realty ONE Group, a real estate brokerage firm with branches located in California, Nevada, and Arizona.