Having a reliable vehicle is a must if you live in Houston. When purchasing a new vehicle, many people want one of high quality. Often people buy a car to reduce their tax rate, but, if you plan to purchase a new home, you should also consider buying a car of top quality. Having a car payment and consistently making payments on time is one of the best things a person can do to improve his or her credit score. In turn, this will also help secure better financing when the time comes for purchasing a new home.
One of the most important factors pertaining to your home loan is your ratio of debt. A conventional home loan ratio is 45%. This ratio is very important. For example, if your income after taxes is $1,000, your loan amount should definitely be less than $450, including principal, interest, property tax, insurance and home warranty (PMI). If you also have a car payment, you need to factor it into the equation. For example, if your car payment is $200, then your lender will make this calculation: $450-$200=$250. This means that you would have to find a home where the loan would be less than $250.
Additionally, people with decent credit scores are seldom denied home loans. Many people cosign for their friends and family. However, cosigning for someone else is counted as debt against the cosigner. Therefore, please think it over carefully before cosigning for others. In some cases, it could result in the cosigner no longer being able to purchase a home of their own, due to damage to their own credit. On the other hand, if you purchase a car after cosigning on a home loan, there are usually no negative effects to your credit.
Some people are still under the belief that they can buy a home without reporting the tax. However, laws regarding home mortgage are continually being updated. Nonetheless, if you are not a cash buyer, you should still be able to qualify for a home loan that both suits your needs and all of the requirements of the lending institution. Since 2008, the Federal Government has made efforts to standardize the home loan process. As a result, there is little difference between lending institutions, and the borrower now enjoys more protections than ever before. However, home loan laws are still very complicated, with many rules and complex procedures to follow. Therefore, you need a lot of background knowledge to prepare for your plan to buy a home.
Many people make the huge mistake of buying an automobile before they apply for a home loan. When this happens, there is nothing I, as a Realtor, can do to help these clients. Please, if you do not have any problems with your current vehicle, do not even think of buying a new one. Do everything possible to resist the temptation of impulsive purchases. To illustrate this, suppose your monthly car payment is $800. In this case, the home loan amount of $80,000 would have to be reduced. For instance, if the lender initially offered a home loan in the amount of $200,000, with a new car payment factored in, they would lower the loan amount to $120,000 accordingly.
Contact Amazing Kim today and find out how he can help you get into the home of your dreams by filling out the contact form or calling (713)725-1703 now.