buying a house.
“Even before you look at houses,” said Janice Lawhon of Home National Bank, “prospective homeowners should come in for pre-approval. It costs nothing and helps people to determine their debt to income so they can know what price of home they can best afford.”
Debt to income is the percentage of an individual’s gross monthly income that goes toward the payment of debts in addition to certain taxes, fees, insurance premiums, etc. A high ratio may indicate too large a debt load and discourage lenders.
To calculate debt-to-income ratio, go to moneycentral.msn.com/personal-finance/calculators/evaluate_your_debt_calculator/home.aspx.
Good credit is important to getting a good loan for a house.
Keep your credit in good standing and check with your bank for pre-approval,” said Cushing real estate agent Debbie Sue Young, president of the Cushing Realtors Board.
The ability of a consumer to manage credit determines the credit rating. The higher the credit score, the more willing banks are to work with you on financing.
A lower score might result in financing ineligiblility or higher interest rates.
“The minimum average credit score for home ownership is 640, which is an increase,” Lawhon said. “There are some FHA loans which will accept less.”
By law, a free annual credit report is available to consumers. To request one, go to www.annualcreditreport.com/cra/index.jsp.
HOME OWNERSHIP TIPS
• Typically, conventional loans require a minimum of 5 percent down.
• Sellers might help with closing costs if buyers ask, Lawhon said.
• As a part of the economic stimulus package, the new first-time home-buyers program offers a tax credit of 10 percent of the value of the home up to a maximum of $8,000. It is available to home-buyers who purchase between Jan. 1 and Dec. 1. First time home-buyers are defined as anyone who has not owned a home within the past three years. Additional information can be found at www.federalhousingtaxcredit.com.
• “A great pick for someone looking to buy a home and do a cosmetic update,” said Schultz, “is the FHA 203(k) loan where a homeowner can purchase a primary residence with 3.5 percent down.” This allows the handy homeowner to finance a maximum of $35,000 for permitted repair work for things like new carpet, paint, tile or cabinets.
• Little repairs are OK in houses, Smith said: “Most important is that prospective buyers should make sure the roof is sound and that there are no plumbing, water, gas or electrical system issues.” Sellers may pay for some repairs if buyers ask.
• Schultz said the Veterans Administration offers a great loan with a zero down option for qualified buyers.
• Smith suggests asking local county clerk or sheriff’s offices for a listing of pre- or foreclosure homes. A listing for Payne County can be found at www.paynecounty.org/sheriff/sales.php.
• Department of Urban Housing or HUD homes can be found at www.homesales.gov.
• The Department of Urban Housing and Development offers the 184 Program for American Indians. It is a 3 percent down program.
• Oklahoma also offers 100 percent rural development loans for people who qualify, Young said.
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