For some people renting may make sense at one point, but according to data, more and more people are wanting to purchase a home. In fact, seven in 10 renters, say they aspire to own their own home someday. There are many reasons why some people choose to rent instead of buying a home in the first place. Whether it is due to turbulence in the housing market, lack of a down payment, or the desire for flexibility, some end up renting far longer than they wish. For many people, renting is only a temporary step before buying a house. When it comes to actually purchasing a home, some buyers will find themselves unable to do so. Here are three things that could be holding you back from taking that next step to home ownership.
Lack of Stability
When you go to get preapproved for a mortgage loan, one of the first things the loan officer will ask you for is your income information. Not only do they want to see that you make enough to pay the mortgage, but they also want to see how long you have been at your job. The longer you have worked at the same company, the less risk they see you as for defaulting on the loan. When applying for a loan, most lenders want to see your pay from the past 24 months. If you have worked at the same job for the last two years, it will be easy for them to compute the numbers to ensure you make enough to pay the mortgage. If not, the lender may end up denying the application if they see a lot of changes in employment and pay.
No Down Payment
It can be very difficult to get a no money down mortgage. In very rare cases, a buyer may end up purchasing a home with no money down, but usually a minimum of 3% is required to purchase a house. Even if you do qualify for a mortgage with a low money down option, you could end up paying a considerable more amount of interest over the course of the loan. It also means your monthly mortgage payment will be higher. To help you get into a home faster, you want to make sure you have a good amount to put down on the home that will make it affordable to you. A conventional loan will ask for a 3% down payment to qualify, while an FHA loan will ask for 3.5% down. It is important to know how much you need to put down before you apply for a mortgage loan.
Too Much Debt
While you may have enough income to pay the mortgage on the loan, the lender also wants to see that your debt to income ratio is not too high. Just because you make a certain amount, it does not mean you are able to make the mortgage payment each month. Other debt you are holding can deter lenders from allowing you to borrow money. While each lender is different in deciding how much debt to income is too much, most lenders generally accept somewhere between 40% to 50%.
For more information, visit websites like http://www.firstmortgagecompany.net.