Increase Your Purchasing Power
If you are looking into purchasing a home, it's likely you are aware of the rising interest rates. The same loan taken out a year ago may cost less over time than a loan being taken out today. Rising interest rates can diminish someone's buying power, however, there are still ways to regain your power, despite rising interest rates.
Stay Within Your Financial Means
Look at houses within your means. Just because you qualify for a $500,000 house does not mean that you need to buy it. If securing a loan for a $500,000 house means that you are going to be in a tough position financially, you probably shouldn't do it. It's not worth breaking the bank to pay a mortgage that is above your means in hopes for future financial success. A better approach is to buy a starter home until you are financially in position to purchase your 'dream home.'
Pay Off Your Debt
This could mean pulling money from the down payment to pay off consumer debts. This even includes consumer debt that may have low interest rates. Paying off your past debts will improve your spending power and provide a healthier household budget.
If you are in a situation where your income is limited, you could still find an affordable situation by securing a cosigner. This means asking family or friends to cosign on your mortgage. Doing this will increase your purchasing power, and give you a financial advantage. Once you are able to get your finances where you want them, you can refinance that person off your mortgage.
Receiving a gift can help bridge the gap between where you are now, and where you would like to be. For example, you have the money for a down payment but you don’t have enough money for closing costs. Not having enough money for both your down payment and closing cost will be problematic on closing day. Perhaps you have a friend or relative who would be willing to give you a monetarily gift, if they have the liquid assets to do so.
Change Your Mortgage Loan Program
One example of changing your mortgage loan program would be switching from a conventional mortgage to an FHA mortgage. These loans can get approved with a higher debt-to-income ratio. This could mean the difference between getting the mortgage and not getting the mortgage, or even purchasing your home in one neighborhood versus another. This is also important in relation to spending power. Lenders will look at your debt-to-income ratio as one of the most important aspects in whether you qualify for a loan.
With these tips on how to increase your spending power, your chances of securing a home mortgage should greatly improve. Contact our team at ProVisor for any questions on securing your first or next home loan. We look forward to working with you on your home purchasing in the Milwaukee, Waukesha, Brookfield, Watertown, East Troy, Madison, and Midwest areas!