Getting Ready to Buy a New Home? Need a Mortgage? Seven Things to Consider…
1. Realtors and mortgage professionals agree that you must find out what price home you can afford before you start looking. A general rule of thumb is that the sales price of your new home can be equal in price to three times your gross annual income. However, there are other factors to take into consideration to see if this is what you can really afford.
2. Your ability to repay the loan is crucial. Do you work full-time? Part-time? Self-employed? Retired? How long have you been in your current job and do you have reason to believe you will stay there? Are you relocating? What about raises and bonuses? Besides a paycheck, what other type of income do you receive? Alimony? Rent? Child Support? All these factors should be taken into consideration. Even if you have NO income, you may still be able to get a mortgage loan based on your other assets. The amount of cash you have (or can get) for a down payment and closing costs. Most lenders require 20% down if you want to avoid the added expense of mortgage insurance. However, let’s not forget about FHA and VA government-sponsored loan programs if you qualify. Most lenders nowadays have special loan programs to fit almost everyone’s needs.
3. The amount of debt you have outstanding, including car payments, credit card bills, first and second mortgages (equity loans), etc. Will these debts be paid off if you’re selling a home in order to purchase a new one? What other kinds of monthly obligations do you have?
4. Your credit history plays a big role in deciding what interest rate you will pay on your mortgage. It’s a good idea to go online to myfico.com to get a copy of your personal FICO score. You can get a FREE credit report once a year from the three major credit agencies, or get your scores and you’ll be prepared when you meet with a lender. Right now with the tightened lending guidlines, your Credit Score is CRITICAL in deciding if you will qualify. 620 is considered a MINIMUM now to obtain financing. This has been increasing over the past year. In early 2009 I was able to help a family get financing with a 580. Keeping track of your scores, is really important if you want to get a house.
The higher the score, the better credit history you have. If your credit score is lower than you think it should be, you may need to go further and check into why. You can get a detailed analysis from several local credit bureaus. Are there errors on your report? Are there reasonable explanations for items that bring your score down? Some lenders recommend a yearly check of your credit just to make sure there are no inaccuracies or problems.
5. What kind of mortgage fits your lifestyle? There are many different types of mortgages to choose from. Some of the most popular are 30-year, 15-year, and adjustable rate mortgages (ARMs). Lenders are getting more and more creative when it comes to tailoring a mortgage that fits homebuyers’ needs. Take advantage of your lender’s expertise when selecting a mortgage that’s right for you and your family.
6. Interest rates you will pay on your mortgage depend on a lot of things, some of which are mentioned already like credit score and history. But the prime lending rate that the Federal government charges banks and savings and loans, and the general state of the economy also play a role. Lenders tend to keep interest rates as low as possible in order to remain competitive.
7. The process of purchasing a home is much easier if you get pre-qualified or even pre-approved with your lender for a home loan. The amount determines how much home you can buy and makes you a much more credible buyer with home sellers. When you make an offer on your new home, the seller will know you’re a serious buyer and will be much more likely to consider your contract.
When you are ready to make a move, or if you have any questions please free to give me a call/text/email anytime 941-840-0150, joe@manateemoves.com
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