Get Closer to Your Dream House

Many people fail to realize the dream of owning a home because they fail to qualify for a mortgage. By taking measures to improve your financial position, you can increase your chances of success.

 

While owning a home remains a top dream for many Americans, only a handful of them get to realize it. As of 2016, only 75 million people owned the house that they were living in. On the other hand, over 43 million families were living in rental homes.

 

If you are looking to step up and become a homeowner, you may need to improve your finances. Getting the best mortgage rate in Tempe is the key to a successful homeownership process. Improving your finances increases your chances of qualifying for a mortgage and getting good terms.

 

Lower the Amount of Debt that You Carry

 

All mortgage plans from 5 to 30 years feature monthly repayments. As such, you need to convince your lender that you are in a position to make the payment in full and on time. If you are carrying too much debt, you might fail to live up to your promise. Understandably, a lender won’t approve your loan if your debt-to-income ratio is high. Therefore, you need to pay most of your outstanding debt before applying for a home loan. Preferably, keep your debt utilization on your credit cards below 30 percent because this ensures that you have a high credit score.

 

Raise that Down Payment

 

To safeguard their interests, lenders impose private mortgage insurance on homeowners borrowing more than 80 percent of their home value. While making it possible to own a home, the insurance payments don’t count toward buying equity in the house. Raising at least 20 percent of the down payment lets you escape the PMI, meaning that every cent that you pay goes toward servicing the home loan. Tightening your budget or taking on an extra shift at work can help you raise the amount quickly.

 

Buying a home is a cash-intensive project that may not be possible without the assistance of a mortgage lender. To increase your chances of qualifying for such a loan, you need to improve your finances.

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