Six Must-Know Tips for National Homebuyers Month
Six must-know tips.
Real estate signs are on display in in full force, and the open house schedule is getting crowded. But before navigating the labyrinth of MLS listings, it’s wise for potential homebuyers to take a step back and get educated. What better time to study up than June, when it’s National Homeownership Month?
Zions Bank offers a wealth of tips and resources through its online Homeowner’s Café. Among the site’s resources are guidelines for both first-time and seasoned home buyers, such as these six must-know tips:
- Get Educated. There are unique aspects to each type of mortgage or refinance loan, and each type will impact your down payment needs. Take some time to explore your options and compare different loans. Zions Bank helps consumers consider what’s best for them with an online tool that takes clients through a series of questions to help determine the ideal loan for their unique situation.
- Know your down payment options. A down payment is usually between 3 and 20 percent of the purchase price. Bigger is better to avoid paying private mortgage insurance, but the amount you need all depends on credit history, income, the cost of the home, and the type of mortgage. Meet with a banker to get familiar with all of the options.
- Understand your debt-to-income ratio. Laws that went into effect in 2014 require lenders to document more about your finances and debt-to-income ratio. That’s your monthly debt divided by your monthly gross income. Your ratio should generally be below 43 percent, according to the new regulations.
- Cut spending. Not on a budget but considering a home purchase? You probably should be. Take a hard look at discretionary spending like entertainment. If you have debt across multiple lines of credit, you may want to consolidate it into one payment.
- Prep for Prequalification. Getting prequalified will give you a realistic budget before you find a dream home that’s outside your price range. It’s important to plan since the loan process can take anywhere from 30 to 45 days. To make that go as quickly as possible, gather your employment information, current pay stubs, bank statements, W-2 forms, and other asset information and meet with a mortgage banker who can answer your questions and give you a nonbinding prequalification.
- Choose a lender carefully. A mortgage loan is one of the most complex, high-dollar financial commitments you can make. Work with a lender that can offer a variety of products. Ask if they can make an independent decision about financing, or if their offers are contingent on approval from a headquarters office.