Do You Know Your Buying Power?

Buying Power Irvine, CAYou should have a good understanding of your buying power before you start looking for your next house. 

When it comes time to start looking for a house, it’s all about buying power. The more buying power you have, the easier it will be to move into the house of your dreams. Take a close look at these four numbers that will determine the strength of your buying power.

  1. Down payment – the more you have to put down for your down payment, the better position you will be in. Sticking to the 20 percent rule when it comes to down payments comes with many benefits. It can eliminate your need to purchase private mortgage insurance, make it possible to negotiate lower interest rates, and can help to lower your monthly mortgage payments.
  2. Credit score – your credit score is the easiest ways for your lender to figure out if you will be able to pay your mortgage on time each month. Having a low credit score does not mean that you will never get approved for a mortgage, but it will make it more difficult.
  3. Assets – when your lender asks for a list of assets, they are asking for proof of where your down payment is coming from and how big of a financial cushion you have. The more assets you have, the more your lender will believe that you will be able to keep up with your mortgage payments.
  4. Debt-to-income ratio – your lender will look at your front-end ratio, or your monthly housing payment divided by your monthly income, as well as your back-end ratio, which is how much of your monthly payment will go to paying your existing debt. The lower your debt-to-income ratio, the better position you will be in.

For all of your mortgage needs, including help determining your buying power, contact Avis Lending, with teams in Irvine, California and Lahaina, Hawaii.

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