Most lenders prefer that long-term debt comprises a maximum of 33 to 38 percent of a borrower's monthly gross income. Some mortgage loan options, however, may have more relaxed qualification guidelines regarding debt-to-income (DTI) ratios.
Consumer Release, Calabasas, CA (PRWEB) March 20, 2007
Home loan interest rates at historically low levels and a variety of affordable mortgage loan options have created conditions that favor first-time home buyers. Some prospective buyers may still feel overwhelmed by the prospect of a first home purchase given the recent news coverage about falling home prices and the lack of affordability in some areas of the country. Experts at Countrywide Home Loans, Inc., a member of the Countrywide (NYSE: CFC) family and America's #1 home loan lender*, have suggestions that can make the home buying process a rewarding experience, if consumers explore all available home mortgage options and plan carefully.
For your own personalized, no obligation home loan consultation, homeowners can call 1-800-768-9462 or apply on-line.
"Owning a home instills a great sense of pride and can provide financial security and stability for many homeowners," said Dan Hanson, managing director of Countrywide Home Loans. "A home is not only a house for your family, but a financial investment which generally appreciates over time and can provide significant tax benefits."
Hanson says prospective buyers can overcome the sometimes difficult down-payment hurdle by setting an aggressive budget and then buckling down and sticking to it. "Buyers should examine their spending habits and lifestyle for areas where they can cut back and increase their savings," he said. "Foregoing a new car or a vacation now can pay off in the long run when working to accumulate the down payment for a new home."
Explore Down Payment Options
Traditionally, home loan lenders required borrowers to provide a twenty percent down payment when purchasing a home which functioned as security to the lender for making the loan. Raising such a large sum of money unfortunately prevented many people from becoming homeowners.
Today however, Countrywide Home Loans offers a wide range of home mortgage loan programs featuring low down payment options. Some loan options require less than five percent of the home's selling price as a down payment. Additionally, Countrywide has a variety of lending programs specifically designed for low- and moderate-income buyers, and offers mortgage loans with low down payments, more flexible underwriting guidelines, reduced income requirements to qualify and minimal mandatory cash reserves. In addition, many cities offer special down payment assistance programs, or silent seconds, to help first-time home buyers accumulate the down payment funds.
"Buyers should also look at reducing their personal debt," said Hanson. "Most lenders prefer that long-term debt comprises a maximum of 33 to 38 percent of a borrower's monthly gross income. Some mortgage loan options, however, may have more relaxed qualification guidelines regarding debt-to-income (DTI) ratios." Long-term debt includes loan or credit card payments, taxes, and other debts that will take more than ten months to pay off. Making extra payments or paying off credit card balances can help reduce a borrower's DTI ratio.
Examine Your Credit Score
Prospective buyers can also prepare to purchase a home by examining in advance their credit record and knowing their FICO® score. "At Countrywide, one of the factors we consider is one's credit history," said Hanson. "It's a good idea to review one's credit report and clear up any discrepancies before considering purchasing a home or applying for a mortgage loan, especially if there have been any previous credit problems," he added.
According to Hanson, the first and most important step before shopping for a home is to get pre-approved for a home loan. Pre-approval verifies a borrower's credit information and determines how much they can afford to spend on a home. With a pre-approval, the lender generally commits to provide financing contingent on a satisfactory property appraisal, title review and no change in the borrower's financial condition.
"Pre-approval lets qualified buyers know how much house they can afford," said Hanson. "It also improves their bargaining power with a seller by showing that they are serious and eager buyers." Countrywide can approve qualified buyers for a home mortgage upfront, allowing them to begin their search for a home immediately.
Manage Your Mortgage
Once you're in your new home, Hanson recommends that homeowners closely monitor and manage their home mortgage loan as they would other financial investments within their portfolios. "There's a prevalent misperception about mortgages that may prevent many Americans from realizing their home's full financial potential," said Hanson. "Throughout the life of your loan, keep a close eye on the interest rate, the loan term and other factors to ensure that you still have the best available home loan given your current financial situation."
For more information, call Countrywide at 1-800-768-9462, or visit us on-line.
About Countrywide Financial Corporation
Founded in 1969, Countrywide Financial Corporation (NYSE: CFC) -- America's #1 home loan lender as ranked for 2006 by Inside Mortgage Finance (Feb. 2, 2007), Copyright 2007 -- is a member of the S&P 500 and Fortune 500. Countrywide is a diversified financial services firm primarily focused on real estate finance and related activities. Through its family of companies, Countrywide provides mortgage banking, capital markets, global operations and insurance, in domestic and international markets. The company is headquartered in Calabasas, California and has a workforce of more than 50,000 with over 900 offices. For more information about the company, visit Countrywide's Web site at http://www.countrywide.com.