Mortgage rate increases are all over the news, leading some hopeful homebuyers to wonder if 2023 is still a good year to buy a home. Even if you will pay a higher interest rate than you would have 2 years ago, buying a home this year remains a great way to build financial stability and invest wisely for your future. To continue reaching for your real estate goals in 2023, consider these keys to qualifying for a mortgage this year.
If you have specific questions or want to know whether you can qualify for mortgage today, talk with one of our loan officers any time to learn more.
1. Pay attention to your credit score
You’ve heard it before, and it might sound like a broken record, but a strong credit score is essential when buying a home. Your lenders look to the credit score to determine how skilled you are at managing debt. If your credit score needs a boost, consider some of these solutions to quickly raise it:
- Increase your credit limit to immediately lower your credit utilization rate
- Set up automatic payments so you never miss a payment again
- Dispute any errors on your credit report
2. Address your DTI
Your DTI is your debt to income ratio, calculated by looking at how much of your monthly income goes toward your current debt payments. Our underwriters will want to see that less than 43% of your income is paying down your current debt each month. If you are concerned about your DTI, take some time to address it before you apply for a mortgage.
This might look like consolidating debt, paying down the debt that has the highest monthly payment, or just being mindful about taking on any new debt payments.
3. Understand your options
There are many ways to buy a home beyond the traditional 20% down payment and traditional qualification process. If you are concerned about qualifying for a mortgage, understand your options and talk with a loan officer to find out which type of mortgage is best for your unique scenario.
If you are self employed and don’t have 2 years of employment verification or the tax returns to show your ability to pay for the home, consider a bank statement mortgage where we can qualify you based on your deposits rather than your employment income.
If coming up with a big down payment or cash for closing costs is what it holding you back, let’s talk about qualifying for a low down payment or requesting assistance with the down payment or closing costs.
You might be surprised at just how many mortgage options are out there for you, so talk with us to learn more.
4. Start living by your budget
Living according to a budget may not sound revolutionary, but it is key to financial success. Take a look at how much you are making and create a realistic budget you can stick to. Financial experts agree that more important than the exact budgeting method you choose is the commitment you have to the budget.
Choose a method that will work for you long term, whether it’s a cash envelope system, an app that tracks your purchases, or a spreadsheet where you track everything yourself. Getting in the habit of living by your budget will help you reach your savings goals and prepare for responsible homeownership.
To learn more about applying for mortgage pre-approval, contact us any time. We would love to help you read your goals in 2023.
