Today’s Shortcuts To Homeownership

There has been a lot of talk about the horrific economy, and how it has essentially stolen the life out of the real estate market, including the options to qualify for lending. Well, the truth is that lending is still very much alive, and in some areas thriving. Granted those areas are few and far between, and others are still in decline, but the national qualification terms for lending remain constant.

What It Takes to Purchase a Home

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Today’s loan qualifications require buyers to have a much better credit rating than before; however, this does not require credit to be perfect. For instance, there are major banks that will qualify borrowers with a FICO score of 650. Before the collapse of the real estate bubble, that number was 565. The other factor is that the days of no income verification, no credit verification, or obtaining an immediate second to make the loan over 100% of the purchase price is a thing of the past.

Having 20% down, a FICO in the mid to high 600’s, and a job are the basic necessities for acquiring a home loan. The 20% down is not mandatory, but it will help with eliminating the Private Mortgage Insurance premium, or PMI that is attached to a loan payment for those that opt to only put down the minimum 3% for FHA loans.

Take a Look at Debt

Finally, look at your debt, and only count things that are mandatory as part of the overall debt calculation. This number will not include utilities, cell phones, or food bills. Things included are car payments, student loans, and credit cards. If the overall debt that is paid every month, including the new mortgage payment, is 43% or lower, then borrowers will be able to purchase the home they have been wanting.

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