If you are thinking about buying your first house, you probably have a lot of questions. Common ones are: how much can I afford, can I get approved, etc. It’s also a good idea to organize and try to optimize your finances. However, even if you’re starting with modest resources, you can still set yourself up for mortgage success. Here are some tips on where to start.
Recognizing Mortgage Readiness
Before diving into homeownership, it’s essential to know if you’re genuinely prepared for this commitment. According to a Freddie Mac study, the following signs indicate you might be in the right financial position:
• A credit score of 661 or above.
• A debt-to-income ratio (DTI) under 25 percent, focusing on mortgage debt. Including other obligations like student loans, the percentage can be a tad higher.
• A clean financial history without any bankruptcies or foreclosures in the last seven years.
• No overdue debt payments surpassing 90 days.
Your credit score plays a pivotal role. Landing in the 661 and above range boosts your creditworthiness. However, scores between 600-660 signify you’re on the brink, while anything below 599 indicates you might need to reassess your financial readiness.
Although deviations from these benchmarks don’t disqualify you from getting a mortgage, they might mean you’re overextending yourself or jeopardizing other financial aspirations.
Boosting Your Financial Standing
When considering you for a mortgage, lenders dissect your financial landscape — from credit scores to employment history. To enhance your mortgage approval chances, consider the following:
Monitor Your Credit: Begin by accessing your free credit reports from all three bureaus – Equifax, Experian, and TransUnion. They are available weekly on AnnualCreditReport.com until the close of 2023. Rectify any discrepancies and understand the areas demanding improvement. Remember, most mortgages necessitate a minimum 620 score, but achieving a 740 or higher ensures the best interest rates.
Manage Your Debt: Ensuring on-time payments is crucial. If this has been a challenge, now is the moment to negotiate with creditors for a feasible solution. Lessen your debt through strategies like the debt avalanche, debt snowball, or consider debt consolidation. An optimal DTI ratio is often below 45 percent, although the specific percentage can vary by lender. Also, be wary of new loans which might spike your debt or adversely affect your credit score.
Prioritize Savings: Set aside funds not only for the down payment and closing costs but also for additional expenses like furniture or repairs. On average, the down payment in the first quarter of 2023 was $26,250. Although first-time buyers often deposit 6-7 percent of the purchase price, some loans only demand 3 percent down. Closing costs, too, can vary based on the location. Regardless of the exact amount, start saving with steps like automating your savings or reducing discretionary expenses. And fill out our online analyzer or schedule a meeting on our website and we can develop a customized plan for you.

This week we saw the release of Consumer Price Index (CPI) for June 2023, which recorded a rise of 0.2 percent, a slight increase from May’s 0.1 percent, according to the U.S. Bureau of Labor Statistics. Year-over-year, the all-items index experienced a 3.0 percent hike, a decrease from May’s 4.0 percent, indicating a sustained deceleration in inflation for the past 12 months. With the inflation rate now standing just one percentage point above the Federal Open Market Committee’s 2 percent goal, the inflation scenario, particularly its impact on the housing market, demands a closer look.
The slowing of inflation, however, does not translate equally into the housing sector. The Bureau’s data highlight the ‘shelter’ category, encompassing housing costs, as the most significant contributor to the CPI’s all-items increase. However, he also hints at potential stabilization in rents and home prices, a necessary step in addressing the critical issue of housing affordability in the nation.
Encouraging data from CoreLogic suggest a slowdown in the home price growth rate, while Fannie Mae’s Home Purchase Sentiment Index shows a meager increase, pointing to a potentially less heated market. However, with current high mortgage rates, potential home buyers might still hesitate. Lawrence Yun, Chief Economist at the National Association of Realtors, offers some optimism, “Low inflation means low mortgage rates. Therefore, decelerating consumer prices could steadily lift home sales and increase home production in a few months.”
If you are considering making a move, schedule a consultation with us on our website and we can recommend options based on your unique needs.

With housing prices pushing the affordability envelope for many Americans, some individuals are considering buying a fixer-upper. We’ve all seen the home makeover shows with astonishing before and after transformations, but should you take on such a project? Here are a few things to consider:

1. Know Your Limits: Assess how much of the work you can handle yourself. Consider how much time you have available for renovations. Ask yourself if you’re prepared to live in a construction zone for a while.
2. Work Out Costs In Advance: Invite a contractor to join the inspection and provide a written estimate for the proposed work. If you’re planning on doing the work yourself, calculate the cost of supplies. In either case, add an extra 15% to the costs to account for any unexpected expenses.
3.Check Permitting Costs and Procedures: Consult with local officials to determine whether your planned work requires a permit, and what the associated costs might be.
4. Be Extra Careful with Structural Issues: If the house requires structural repairs, be sure to double-check the work and its cost. Hire a structural engineer for an inspection. If structural work needs to be undertaken, make sure to factor this into your bid.
5. Include Inspection Contingencies: It’s crucial to hire professional inspectors to check for hidden issues like mold, piping problems, pest damage, etc. If issues arise, don’t hesitate to ask for discounts. Should too many red flags be raised, or if the seller isn’t willing to adequately discount the cost of repairs, then it may be in your best interest to walk away and continue your search elsewhere.
If you aren’t sure how much you can afford with today’s changing market, schedule a consultation or fill out a quick qualifier on our website.