Categories: Rev. Dr. Charles Butler,
My brothers and sisters, it is time to become proactive in the home buying area! You can no longer afford to wait for the prices to come down. You no longer have time to wait for the interest rates to go down. Yes, I will admit the home buying process has always been difficult to complete and it is not getting any easier. But so, what, tell me something I don’t know! The simple truth is you cannot afford to be intimidated by rising home values or higher interest rates. You must stay focused on doing ‘whatever is necessary’ to complete the home buying process.
An analysis of recent successful home buyers revealed some interesting common characteristics among them. As a prospective first-time buyer this information could be beneficial: (1) they had adequate savings. This should not come as a surprise. Depending on what type of property you are buying, you will need approximately $30 – 45K or more for the down payment and closing costs.
They all possessed the personal discipline to maintain an aggressive budget and were able to successfully eliminate wasteful spending. Stick to your budget. Make tough financial sacrifices. For example, consider taking your lunch to work rather than spending $20 – 25 each day. That will add up to a weekly savings of $125 and a monthly savings of $500. By aggressively saving you will accumulate an adequate amount of money to begin the process!
Most of these buyers had a stable income. This is now extremely important because banks are only lending about 3 ½ – 4 ½ times your annual income. But the challenge here is that lenders will calculate their debt-to-income ratio (DTI) based on your gross monthly income. However, your take home amount (net monthly income) is considerably less. So, the more money you make, the more you will be able to afford. However, you must calculate your affordability based on your monthly household budget. Remember the number one priority when shopping for a home is having a mortgage that you can comfortably afford.
(2) They had a solid credit history. In today’s market, very few lenders will offer you a mortgage with a weak credit score. Most banks are requiring a minimum score of 660 or higher. Remember the higher your score, the better interest rate you will be able to secure. As you prepare for homeownership, continue using your credit wisely. High outstanding credit balances can severely reduce your loan amount.
(3) They had a trusted and experience team of professionals assisting them through the process. Start assembling your team now to work with you. Take your time getting referrals from friends and your housing counselor. Put together a solid plan of action and stick to it.
If you are interested in attending the workshop or have questions regarding the home buying process, contact Rev. Dr. Charles Butler at (212) 281 4887 ext. 231or email at cbutler@hcci.org.
