Get Your Finances Together

One of the first things to do before purchasing your next home is to get your finances together.  Two key items all lenders will examine for home buyers is your credit score and your debt to income ratio.  There are three reporting credit bureaus, Equifax 866-349-5191, TransUnion 800-916-8800, and Experian 888-397-3742.  You will find that in many cases you will have a different credit score with each of the credit bureaus.  Search homes for sale in Albuquerque NM.

Types of Mortgages

There are many types of loans, Federal Housing Administration (FHA), Conventional, Veterans Administration Loans (VA home loans) and we have the first time home buyers program in Albuquerque NM.  Each loan has a different minimum down payments, FHA is 3.5%, Conventional is 3.0%, VA is 0%, the first time home buyers allows home buyers to purchase a home for $500 down payment.  These are all minimum down payments.

You will be required to pay mortgage insurance is you make a down payment of less than 20%.  Mortgage insurance is insurance paid by the borrower to provide insurance to the lender in the case the borrower fails to repay the mortgage.

Credit Scores

Many loans will have a lower interest rate for borrowers with higher credit scores.  So the higher your credit score the lower your house payment will be.

All of these mortgages have requirements regarding the minimum credit score allowed to qualify for a mortgage.  As of this writing, the minimum credit score for the first time home buyers program is 620.  In most cases, borrowers will need a minimum credit score of 580.  Meeting the minimum credit score requirement is no guarantee borrowers will qualify for a mortgage.  Some lenders may qualify borrowers with lower credit scores, however borrowers will need a larger down payment.  It is recommended borrowers work on improving their credit score if it is below 580.  Lenders will evaluate each of your three credit scores.  Most lenders will throw out your high and low and use the middle credit score to determine your credit score.

Debt To Income Ratios

The second main are is your debt to income ratio.  The lower your debt to income ratio the better for you as a home buyer.  There are two ways to improve your debt to income ratio, fist is to lower your debt payments.  I recommend you start paying off the debt with the lowest balance.  After that debt is paid off, the attack you next lowest balance.  Continue this strategy until your debt to income ratio is in the range you need.  The second way to improve your debt to income ratio is to increase your income.  Can you volunteer for overtime, apply for higher paying jobs within the company you work.  If none of this is an option, look for opportunities outside your current employment.  Be careful with this option, lenders view W2 earners differently than 1099 earners.

Lenders will also want to evaluate the length of time borrowers have been working.  In most cases, lenders will require 2 years of continuous source of income.  There are some exceptions to this rule.

It's Time To Buy A House

Now that you have your finances in order, it time to buy a house.  Find a real estate agent that you trust, you can work with, and has great experience in the market.  You might as well find a real estate agent to help you through this complicated process.  In the Albuquerque real estate market, buyers do not pay their real estate agent to help them purchase your house.  Your real estate agent  gets paid by the seller as the seller agrees to pay a commission to any real estate agent that brings a buyer to the table.  Rules, regulations, and customary actions are different through out the United States, so make sure you understand your real estate market.  Get out and buy the home of your dreams.