9 Months Until Closing Date
Check credit score. Whether you choose to have your credit score checked by your personal bank or through a credit check website, such as annualcreditreport.com, it is extremely important to make sure your credit score is correct and free of mistakes. According to the Federal Trade Commission, 1 in 4 Americans identify errors on their credit scores, and 5% of these errors lead to an increase in interest rates.
Determine How Much You Want To Afford. It’s important to ask yourself how much you want to afford, not how much you are able to afford. Being house poor is stressful and makes for an unpleasant home owning experience. Lenders tend to look for a total debt-to-income (debt includes future mortgage and any other debts) ratio of 43% or less. Take advantage of our mortgage calculator to determine your estimated future mortgage cost.
Develop a down payment plan. As you are saving up for your down payment, remember that most banks prefer proof of a stable income for 60 to 90 days before applying for a loan. As you monitor your debt-to-income ratio during this period, make sure your down payment will allow for a mortgage with realistic, and practical, interest rates and monthly payments.