Financial knowledge for real estate purchasing

A Sufficient Down Payment 

  • Lenders may require a varying amount as adown payment (as low as 3.5% and as high as 50% in the US), depending on the borrower and the purchase 

  • The higher the down payment, the lower the interest payment will be on the remainder of the loan 

Assess your credit score and debt-to-income ratio

  • Yout FICO score demonstrates your ability to repay your debts 
  • Assess your credit score once you plan to obtain a mortgage loan for house purchase
  • Try to maintain a credit score above 640 
  • The Consumer Financial Protection Bureau has rules stating that the debt-to-income ratio cannot exceed 43%

An Affordable Interest Rate 

  • Check with different financial institutions to get a favorable interests rate 
  • A great tool for researching and comparing interest rates is a mortgage calculator.

Being Able to Pay Closing Costs 

  • Closing costs are the expenses, over and above the price of the property, that buyers and sellers normally incur to complete a real estate transaction
  • Borrowers need to pay for the appraisal, credit report, attorney/closing agent fees, recording fees, and processing fees
  • Closing fees typically vary between 2% to 5% of the purchase price