First Time Home Building
Building your first home is a significant financial decision. While you may be excited to begin looking for the ideal property and explore building plans, there’s more to consider as part of the journey.
Building your first home is a significant financial decision. While you may be excited to begin looking for the ideal property and explore building plans, there’s more to consider as part of the journey.
You should try to minimize debt load because mortgage lenders calculate what’s known as your debt-to-income ratio. This is how much money you spend each month paying off your debt expressed as a percentage of your total monthly income. Ideally, you want a low debt-to-income ratio. A standard benchmark is 43 percent or lower.
Your credit score is a combination of past credit history, current credit and a prediction of future credit performance – all expressed as a single number and used by lenders to decide if you are approved for a mortgage. Check your credit reports with all three national consumer-reporting agencies several months before you apply for a mortgage. Common errors to correct can range from inaccurate payment information to an out-of-date home address or employment information.
A new construction loan can be similar to a traditional fixed rate mortgage loan. One difference is that you can use this borrowing option to finance the purchase of the lot or existing home as well as the costs of construction or renovation — all in one convenient mortgage loan.
This is an important step to securing the right financing. Every borrower is different, and a mortgage loan officer will know questions to ask in order to best match you with the right financing option.
