Watching Your Wallet: ways to improve your mortgage
LANSING, Mich. (WILX) - If you’re thinking about buying a home in the next year, there are steps you can take now to get your financing in order.
And it could make your mortgage application more attractive to lenders.
Mortgage lenders tightened their standards in 2020; making it harder for some buyers to get financing-especially a conventional mortgage.
So, if you’re hoping to get a conventional mortgage and take advantage of these low low-interest rates, your application is going to have to stand out.
Liz Renter with nerdwallet says one way to make that happen is to keep your debt levels low.
“So, lenders like to see a debt to income ratio of about 30% or lower. So what that means is the amount of money you’re sending out to your debt payments should be about 30% or less of your monthly income,” said Liz Renter.
Liz also you’re going to want to keep your credit score high. In 2020, conventional borrowers had an average fico score of 750.
So do everything you can to get the credit score up and keep it up until the sale is final.
And finally, do what you can to save up a nice down payment. 20-percent down payments are not a requirement.
There are still low down payment programs available.
However, to qualify for the best mortgage rate from these conventional loans, you are going to want to aim for that 20% down payment.
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