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These financial numbers directly affect your purchasing power.

When you decide to purchase a home, the list of things to consider can be daunting. As you’re comparing location and square footage, mortgage lenders are looking at specific numbers that create your financial picture. Getting your finances in check will help to improve your purchasing position so that you can engage in making offers on your new home as soon as possible!

#1: Credit Score

Your credit score is one of the quickest ways a lender can determine your ability to pay your loan on time every month. Five key factors influence your score: payment history, amounts owed, the length of credit history, credit mix, and new credit. Be diligent now to improve or perfect your score by reviewing your report, lowering your debt, and not assuming any new debt. A score of 760 to 850 could land you the best interest rate possible.  Do not make any new purchases while you are preparing to purchase a home or in escrow on a new home.  For example, WAIT to purchase those appliances or new car until AFTER you close on your new home!!

#2: Down Payment

The ability to offer a strong down payment can improve your overall buying position. Putting 20 percent or more of the total price down will eliminate the need for private mortgage insurance (PMI) and allow you to negotiate a lower interest rate.  Sellers are also tempted to select buyers with a higher down payment.

#3: Debt-to-Income Ratio

Lenders want reassurance that you’ll be able to pay your mortgage in addition to all other outstanding debts currently in your name. Not only will they want to ensure that your monthly mortgage payment is affordable, but that your current debt-to-income ratio has some flexibility to factor in more payments. As a general rule of thumb, your debt-to-income ratio should be at or below 36 percent.

When you’re deciding how to handle your next home sale and real estate contract, acquire the help of a reliable realtor. To get started, contact Jenn Blake Real Estate Group at Pacific Sotheby’s International Realty in San Diego, California at 858-663-6788.