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Mortgages Tips from Primary Residential Mortgage
Home Buying Strategy
Home buyers face a litany of new terminologies, new industries and difficult decisions that can be intimidating even if it weren’t for the fact that it’s probably the largest monetary outlay any of us will ever make.
o why do it? Besides stability and pride of ownership, homeownership provides the single biggest tax break most consumers can obtain and lets you build equity at the same time. It makes the best short and long-term financial sense for a high majority of working people.

Before buying a home, make sure your financial house is in order. Below are some planning strategies you can adopt prior to your first purchase.
Debt Reduction
Most consumer debt, especially credit card debt, carries higher interest rates than home mortgages – oftentimes at least double. This makes saving for a down-payment while carrying credit card debt that much harder. Also, mortgage companies and lenders will take a close look at all of your outstanding debt and make determinations on your loan based your total monthly debt service (how much you pay monthly on all of your outstanding loans). Also, since mortgage loans (even second or piggyback loans) carry a lower interest than credit card or automotive loans, it makes sense to pay off existing, higher-interest debt, pay less of a down-payment and, if needed, obtain a second to cover the rest of the cost.

So, while stashing money away for your down payment, remember that getting your total current debt down is equally, or more important than a big down.
How Much can you Afford? Conventional mortgage wisdom (and most lenders rule of thumb) holds that your total mortgage costs (this includes homeowner’s insurance, taxes and mortgage payments) should be under 28% - 30% of your gross income. Closing costs can be 3% to 5% of the total cost of the home. Remember to subtract your down-payment from the total cost of the home.

No Big Purchases
In the same theme as the debt reduction, avoid making big purchases (cars, vacations) until after you are in your new home. While it might not be a deal-breaker with a lender, you might get better rates as a result of holding off until after closing.

Your Credit Score
Your credit score tells a lender a lot about your financial habits, whether you want it to or not. The best way to keep your credit score higher rather than lower is to pay attention to it: once a year,
order a credit report from each of the three credit reporting bureaus. Consumer credit inquiries don’t hurt your credit score like credit inquiries from credit cards companies and department stores can. If you see discrepancies on your report, dispute them and ensure they are cleared from your report.

The worst items that can appear on your credit report (apart from the obvious foreclosures, bankruptcy and defaulted loans) are late payments. Make sure to stay current on all of your debt payments.

Also, make sure that your credit card balances aren’t maxed out. Lenders keep and eye on the size of your balances in relation to the limit and your monthly payments. Your number of credit cards play a role as well since your total credit limit, if you were to max out all of your available credit, would put you well past the total monthly debt service lenders like to see (typically around 40% of your gross income).
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