Debt Management Advice

Buying a House in 6-12 Months? Here’s Debt Management Advice

Are you carrying debt and would you like to buy a home in the next 6 to 12 months? Your debt won’t necessarily disqualify you from securing a mortgage. However, solid debt management may be necessary to qualify for one. Lenders will look at your debt when determining your “risk factor” and whether they can offer you a loan.

In this mini-guide, Express Real Estate Loan offers debt-management advice to maximize your chances of securing a mortgage for your future dream home:

You’ll need a good debt-to-income ratio

All lenders evaluate a mortgage applicant’s debt-to-income ratio (DTI) when assessing their suitability for a loan. The debt-to-income ratio shows how your debts relate to your income – the lender wants to know if you have enough income left over, after you make your debt payments, to meet mortgage payments.

According to Wells Fargo, a DTI of 35 percent or less is considered good (they also offer a DTI calculator). When your DTI is 50 percent or more, it is unlikely you’ll qualify for a mortgage. You have to take action, in this case, to reduce your debt before applying for a mortgage.

You’ll also need a good credit score

You need a credit score of a minimum of 580 to 620 to qualify for a mortgage. Your credit score will determine not just your suitability for the mortgage, but also your credit terms. With a good score, you will have to make lower payments (with less interest) over time. If your credit score is poor, you can build it up quickly. R&R Insurance notes that you can add 100 points a month or more.

You will still need some cash

When paying off your debt, be sure to set aside some cash for various house-related purchases and payments. Not everything is covered by your mortgage. You’ll need cash for down payments (2-5% of the house price), closing costs, moving fees, remodeling, furniture, and professional fees.

Check house prices and trends before making a decision

The housing market, current interest rates, and future trends should factor in when you’re making a decision on whether you should pay off debt – and how much. Depending on how much demand there is for housing, you may be better off waiting and building up your credit score.

You can easily use the internet to do your research on available properties. Simply do a Google search for homes in your desired area and use home sites to find out how hot the market is and what homes are going for. For instance, homes are still selling at a good pace in Sacramento, the average property being on the market only nine days after being listed. Also, the median sale price ($510,000) has risen more than 7 percent year over year.

Some debt types are better to carry than others

Debt experts will tell you that some debts are “good” to have and others are “bad”. For example, student debt is usually considered better than credit card debt – it shows you are responsible and have good earning potential. While there are some caveats, as CNBC explains, you may want to prioritize paying off “bad” debt to make a better impression on lenders.

Considerations and specific steps for business owners buying a home

When you’re a business owner, as opposed to someone drawing a salary, you have some extra considerations to make. You’ll need an accurate income, a separate business and personal income, knowledge of your ownership percentage, good credit, and preferably business ownership for 2 years. Forming an LLC before the purchase can be financially beneficial and smart – it offers tax advantages, limited financial liability, and less paperwork. States have different regulations around LLC formation, so learn how to start an LLC in California before moving ahead.


Keep in mind that any mortgage you do acquire isn’t set in stone. Refinancing will always be an option down the road. So keep that in mind when managing your debt and figuring out what kind of mortgage you would like to apply for. Preparation is the key to success when securing mortgages – be sure to do your homework and get your documents in order for the best results. If you’re confused or stuck, you can always consult with debt professionals. And when you’re ready to get a mortgage for your California dream home, Express Real Estate Loan offers personalized, exceptional service and assistance.

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Express Real Estate Loan is all about lending to future homeowners, as well as offering fast cash for your Sacramento property. Connect with us today to find out more! 916-276-8482

Mortgage Brokers

Mortgage Brokers

They Find the best real estate loans and mortgages


Why Use a Broker?

They Find the best real estate loans and mortgages.  Independent mortgage brokers work for their client the borrower.  The help people find the best mortgages from a broad source of lenders. Professional mortgage brokers are one of the key strategies used by sophisticated borrowers.

What is a Mortgage Broker?

A mortgage broker is an independent real estate financing professional who specializes in the origination of residential mortgage loans. A mortgage broker works with on average as many as 40 lenders at any one time.

Using their professional expertise combined with direct access to hundreds of mortgage loans, a mortgage broker provides the most expert way to obtain real estate financing. They personalized their client’s specific financial objectives then match that to a specific loan program. This way the mortgage broker’s client receives a mortgage that match their goals and objectives.

What Do Mortgage Brokers Do?

Mortgage brokers can serve as safeguards, offering their clients security, safety, and peace of mind. One of the broker's most important functions is managing your loan application through the entire process, constantly watching the component transactions for possible breakdowns. A professional mortgage broker can examine data and program options, researching current market conditions to find the most accurate and up-to-date information about the best cost-effective loan options for their client.

Independent mortgage brokers server their client throughout the mortgage transaction

There are literally thousands of variables that can affect the outcome of your mortgage transaction. That's why you need a mortgage broker to act as a liaison between the title and escrow company, real estate agent, lender, appraiser, credit agency, the underwriters, the processors, attorneys, and any other services which may affect your transaction.

A mortgage broker also:

•             Discusses and explains financing program options

•             Informs you, in writing, of lock-in options

•             Explains all documents of the loan application

•             Explains all associated costs of the loan application

•             Explains the disbursement of all loan applications

•             Explains the loan process, from application to closing

•             Provides you with a good faith estimate of cost and fees

•             Communicates with you throughout the loan process in a timely manner

•             Coordinates the final closing of your transaction


The financial issues associated with buying a home are the reasons why most people succeed or fail. As a former mortgage broker I’ve helped many clients deal with the home buying financial issues properly. They are now home owners. I also saw people struggle with the money issues of buying a home. They were not financially prepared to buy a house. The frustration issue many times was that they did not understand the financial issues to buy a home. So, I was driven to create this Home Buyer’s Financial Guide.


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