Tips to ensure your finances are in order for a Denver-area luxury home.
When preparing to buy a Denver-area luxury home, there’s nothing more important than having your finances in order. That’s because homeownership—especially luxury homeownership—is one of the biggest investments you can make.
It’s important that you are ready to make an investment by gaining a clear picture of what you can afford for your down payment and your monthly mortgage payment as well as costs for moving, home maintenance, and improvements.
Here are some dos and don’ts to make sure you’re financially ready for luxury homeownership:
… check your credit report. Your credit score is the first thing a bank looks at when determining whether or not you qualify for a mortgage. Make sure your credit report is accurate and if not, then dispute the error https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports.
… pay your bills on time. Late payments can negatively impact your credit score. So be sure to keep track of when your bills—including credit cards, utilities, and loan, payments—are due so you can pay them on time.
… have adequate credit established. Most lenders like buyers to have at least three lines open at a given time. This can include credit cards, student loans, or car loans that have been open for at least a year before you buy.
… save money. It’s important you have enough cash on hand for your down payment, moving expenses, home renovations, and deposits for utilities. Make sure you have enough savings to cover these costs as well as any unexpected expenses when you’re ready to buy.
… get pre-approved for your loan before you start looking for your Denver dream home. Pre-approval helps lets real estate agents and home sellers know that you’re serious about buying and can afford the home you want.
… increase your debts before you buy. When you increase your debt, you increase your debt-to-income (DTI) ratio. This is how much you owe vs. your gross monthly income. It’s also how lenders measure your ability to pay your monthly bills including your mortgage. In general, you need to have a DTI of less than 36% to qualify for a mortgage. Plus, the lower the DTI, the more you can borrow and the better your mortgage terms.
… move your finances around. Lenders want to see that you’re reliable, so it’s best to keep your money where it is in your bank account. Make sure you have a complete paper trail if you have any unusual deposits or withdrawals three to six months before buying a new home.
… change jobs. Banks look for stability during the mortgage approval process. That’s why it’s important to stay in your job and keep your salary if at all possible.
… make major purchases until after closing. Purchases of a new car or boat may indicate to a bank that you can’t afford a home because they can decrease your cash on hand or increase your debt.
By following these tips, you’ll increase your chances of being able to buy the Denver-area home of your dreams.
And contact Cindy Marlowe and the Denver real estate experts at Redhead Luxury Properties when you’re ready to look for your new luxury home. www.redheadluxuryproperties.co