The Simple Guide to Buying a Home. Christine Cronin

YOUR Price

      It’s really important to know what you are comfortable spending on a monthly payment. Banks use their own formula when determining how much to lend, so you have to know your own expenses. I was approved for substantially more than I was comfortable paying. This is mainly because they only look at your income to debt ratio and don’t look at lifestyle expenses. Think about what you are willing to cut, and how much you want to save. I strongly advise you to complete your budget, get all your bills in a payment plan, and then figure out the monthly amount you can comfortably afford. Preferably with some extra savings each month. Some people say that you can afford a place that is 3 times your income, I prefer to go with 2 times or a little over that.

      For me, I like to travel a lot, so I put a lot away each month for my travel expenses. They wouldn’t know this and wouldn’t ask this, so it’s important to know your priorities. This will help you determine a housing price that will still allow you to follow your other dreams and goals. Once you know how much you are comfortable spending, you can apply to get pre-approved for a loan and start your fun and exciting house/condo/cabin hunt!

      Something to keep in mind is that it’s usually a seller's market in the spring and summer, which means prices are a little higher but there's also more on the market. If you are hoping to get a better price, you might want to look in the fall and winter. You do run the risk of less properties being available, but they are usually cheaper.

      Pre-approval and Credit Scores

      Make sure to get pre-approved for the amount you are comfortable spending on a home. You should get pre-approved once you start looking. Some realtors won’t take you as seriously if you don’t have a pre-approval letter and most places won’t take offers without a pre-approval letter. So, it’s best to get that out of the way once you are ready to start looking. The bank will look at your debt-to-income ratio, credit scores, and a few other factors to determine your loan approval amount.

      Credit scores range from 300-850. There are a number of variables that determine your score. These variables include timely payments on credit cards and loans, credit history, inquiries on your score and length of credit. A tip on building your credit is to get a credit card and use it on one thing you buy routinely, like gas for your car. Never spend more on your credit card than you have in your bank account.

      You can check your score through your bank or organizations like Credit Karma. If you have a error on your credit score, contact that vendor and explain why that shouldn’t be on your report. If they don't help you resolve the issue, take your concern to the Consumer Financial Protection Bureau (CFPB). They are here to help us. The CFPB is a federal organization that helps consumers with mortgages, credit cards, credit scores and other financial services and products.

      Check your score once a year to make sure there aren’t mistakes on the report – it’s more common than you think. Also, check your credit score before you go to get pre-approved in case there is an error that would interfere with your pre-approval process.