We wish our blog readers a warm welcome. As promised last week, we now bring you more mortgage tools for you to use when you decide it is time to buy a home, in this blog entry, Part Two:  How To Buy Your Dream Home.  To re-visit the previous blog, “Tool Number 1,”  click  here.

Tool Number 2: “Nail Down” Your Down Payment! Make your lender feel safe with a substantial down payment. This can also be a great help if there are a few negatives on your credit report. Lenders want at least 10% down payment. With 20% down, Palm State Mortgage Company reminds you that  you can avoid high priced private mortgage insurance.

Tool Number 3: “A Measuring Tape For Your Income,” Your DTI.  DTI stands for a Debt to Income Ratio. Do the math. First total up the bills you pay. Second, figure your gross pay. That means the amount of money you make before deductions. This handy formula takes the amount of money you owe on a monthly basis and compares it to the money you make each month. The resulting number is a percentage of your gross income.

A  Palm State Case Study: Mr. Smith pays $2,000.00 each month in expenses but he only generates $4,000.00 each month. He has a debt to income ratio of 50%. Even if his DTI was just a bit over 36%, he would have the reputation of a high risk borrower. Keep in mind that various lenders have varying DTI constraints.

Although banks use the Gross income to figure your DTI, perhaps you will get a better understanding of the “dreamy” house you can afford if you use the formula with your Net income. This term reflects the money you actually bring home after deductions.

Tool Number 4: “Build Up” Your Income!  This tool is simple to understand. The more money you generate, the more financial respect you will command from your lender.  Dave Ramsey says “Act Your Wage!” Read about his financial advice at this source. Palm State Mortgage believes that the keys of financial preparation and planning, might unlock that your dream home. On the other hand, we also believe that the home that fits your budget might transform itself into the REAL home of your dreams!