How to manage home loan?
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M$3 Answers
They need to make sure to pay off all other debts first. The reason being is that if they have credit card debt, the average annual percentage rate will be more than double the average mortgage rate. Also, credit cards limit how much you can borrow
Determine how much you can afford by using the formula that no more than 28% of your gross income. Make sure when figuring out your down payment to allow 3% to 5% of the value of the home for closing costs.
First time homebuyers with a good income can usually get away with putting only 3% down on their home. The low down payment mortgage will run about half a percentage point higher than a traditional loan. Your options increase as your down payment increases. If you can put 5% down, Fannie Mae will qualify you for a loan even with a smaller salary than the loan with 3% down.
If your credit isn't as good as you'd like it, you could still qualify for a mortgage through Fannie Mae that is as much as 2% less than other financing options.
If you do not qualify for a Fannie Mae loan, you may still qualify for an FHA loan or a government loan, such as HUD.
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M$
Of course, some people live in rental properties that are actually much less expensive than what they can afford in an effort to make sure that they are saving money in order to buy a home. The best way to make sure someone can actually make the payments on the mortgage is to use a budget and stick to that budget no matter what. You can plan how much money you want to spend on every single category and can even plan for unplanned expenses.
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M$
Credit card debt should be no more than 20% of income and they actually allow a little higher. Also with the cards they figure debt to available credit ratios. So if you have $8,000 dollars on a $10,000 limit card it doesn't look good. Either pay down or ask for a limit increase.
Next do they have a credit report and rating in this Country yet. If not they will not get a loan.
If they both have short work histories it will also limit the lenders that will lend to them
You can also increase the chances by putting down 20% of the purchase price and taking mortgage insurance.
Lending is tight right now and the Banks are pretty much just lending to top risks.
Also if they go FHA there is a $2,000 charge from them and a quarter point. I think they are lending at about 4.375% as of today.
In addition if they are young and do not have good qualifications a co-signer with a solid background is nothing better.
This is all assuming they are not some wealthy people from their Country.
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M$
Actually quickly paying your credit cards down to zero will lower your credit score.