As a renter, you have freedom from the responsibilities of homeownership. But at some point, getting a mortgage to buy a house in northern Utah may become your goal. Is now the time to take the leap?
Purchasing a home is an exciting step to take, but it’s also a scary one – when you take out a mortgage, you’ll be taking on a massive debt. Knowing this, you’ll want to give the decision careful thought. Let’s go over the signs that you may be ready to call yourself a Utah homeowner.
You Have a Stable Income
If you can demonstrate that your income is secure, you may be in a good position to secure a mortgage to buy a house. Having a reliable and stable source of income makes it easier to qualify for a home loan. It also decreases the odds that you’ll have trouble keeping up with mortgage payments.
You Have a Decent Credit Score
To get a good interest rate on a home loan, you need a solid credit score. While a score as low as 500 may qualify you for some mortgage programs, higher scores get the best rates. If yours isn’t in the high 600s or greater, you may want to try to improve it before completing a mortgage application.
Your Debts are Manageable
Mortgage lenders will look at your debt-to-income ratio (DTI), or the percentage of your monthly earnings that goes toward debts. If the total amount you owe each month exceeds 43 percent of your income, getting approved for a home loan may prove to be more difficult.
You Can Afford a Down Payment
If you qualify for a VA loan or USDA mortgage, you may be able to buy a house with no money down. If not – and if you’re not eligible for down payment assistance – you’ll need to put down at least 3 percent of the home’s price. If you don’t have enough, homeownership will have to wait.
You Have Plenty of Cash
Mortgage closing costs could add up to as much as 6 percent of your loan balance. Plus, as a homeowner, repairs and maintenance are your responsibilities. If you have a good amount set aside to cover mortgage closing costs and unexpected expenses, you may be ready for a home loan.
You Don’t Plan to Move Soon
When you take out a mortgage to buy a house, it can take a few year to recoup your upfront investment. If you sell the property before then, you may end up taking a loss. So before you apply for a home loan, consider how long you plan to stay in northern Utah.
Not sure if now’s the time to buy a house? Or are you ready to get started with your mortgage application? Either way, the friendly and knowledgeable team at Intercap Lending would love to help with your homeownership journey. Our friendly and helpful mortgage lenders have the experience to offer advice on home loans, and we can help you secure a mortgage with a favorable rate and terms. For more information, contact our office in Orem, Utah, today.