by Maurie Backman | Published on Sept. 20, 2021
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Here's some key advice for buyers today.
Buying a home can be challenging under any circumstances. But in today's real estate market, it can be even more difficult.
These days, buyers are grappling with inflated home prices and limited housing inventory. And if you're new to the process, it's easy to get overwhelmed.
But fear not. Christian Wallace, head of Real Estate Services at Better, is here with some expert tips for home buyers. Here are three invaluable pieces of advice he wants to share.
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Your credit score speaks to how trustworthy you are as a borrower, and it can help mortgage lenders decide whether you qualify for a home loan or not. It can also help dictate what interest rate you qualify for on your mortgage. (The lower your interest rate, the less your mortgage will cost you.)
Most mortgage lenders require a minimum score of 620 to qualify for a conventional loan. Some lenders, however, may have higher standards.
Wallace suggests shopping around with several lenders to see how your credit score fares. If you find that you're being denied a mortgage, or being denied a competitive rate, it pays to work on boosting your score. You can do so by paying incoming bills on time, paying off some credit cards you've accrued a balance on, and correcting errors on your credit report.
While your credit score is certainly an important factor, your debt-to-income ratio (DTI) can play an even bigger role in your ability to purchase a home. Your DTI measures how much of your income goes toward debt, and too high a ratio could be a sign that you're overextended. In fact, as Wallace puts it, "High DTI is the number one reason mortgage applications are rejected."
If your DTI is too high, try paying off some existing loans if possible. And refrain from taking on new debt until you have a mortgage in place. If you can't chip away at or minimize your debt, attack a higher DTI from the opposite angle -- try raising your income via a second job.
Getting a mortgage is only one step you'll need to take on the road to homeownership. You'll also need to find a real estate agent to help you find the right home, and you'll then need homeowners insurance to ensure that you're covered in the event of property damage.
Many buyers seek out these services separately. But a good way to streamline the process is to find a single source for all of them. And in this regard, Better can help.
As Wallace explains, "Better started off solely as a mortgage lender and branched out to other business lines -- real estate services, homeowners insurance, title insurance, and closing services -- after listening to our customers’ confusion about those products and processes."
Now, Better serves as a one-stop shop for home buyers. In fact, Better Real Estate currently has about 150 active agents across 14 states, and the goal is to hire 500 agents across 20 states by the end of the year.
Not only can using a comprehensive service like Better save home buyers time, but it can also save them money. "Our commission-free mortgages save customers an average of $8,000 over the life of the loan," Wallace says. "And Better Real Estate clients who use Better Mortgage save $2,000 off closing costs in addition to a 1% rebate."
Owning a home can lend to more financial stability. If you're in the market for a home, it pays to follow these helpful tips. They could spell the difference between a smooth buying process and a frustrating one.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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