Texas Home Buyers

Right now could be a prime time to make a purchase in the Texass housing market. Interest rates are at lows we may not see again for a long time – if ever – and home prices have leveled out. If you have cash for a down payment and good credit, you will have no trouble qualifying for a home loan.

Prior to completing the home buying process, though, many people forget how new expenditures and shuffling money around can affect their ability to qualify for a mortgage, or how it can impact the price of a home they can afford.

Debt to Income Ratio

If you enter into a negotiation on a piece of , the lender is going to look at your debt to income ratio in determining whether you qualify for a loan. What this means is they will compare the ratio of monthly debt you owe with your gross income, and lenders will only allow a certain percentage of your income be paid to satisfy debt.

Qualifying debts will include your house payment, interest, homeowner’s association fees, insurance, property taxes, revolving debt such as credit cards, car payments, and any other consumer debt you may have.

Pay Your Debts Down

If you carry a substantial amount of debt, pay off as much as you can prior to applying for a home loan. The lower your debt to income ratio, the more money you can qualify to borrow. This could mean the difference between your dream house and the fixer-upper down the block.

Until you have secured your home loan and closed escrow on your new home, do not make any purchases other than what is necessary for day to day life. Anything you charge, or any loans you acquire, will negatively affect your ability to purchase your desired piece of .