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YOU WANT A HOUSE AND YOU WANT IT NOW! |
So you’re ready to buy a home. Do yourself, your Realtor and the seller a favor and get pre-approved before you even start looking. One of the worst things for a buyer is to fall in love with a house and find out that you don’t qualify. For the seller, it can be very disheartening to think you have your home sold and you can get on with things, and then find out it isn’t going to happen. Do I need to mention how your agent will feel after after spending time showing property, writing and presenting an offer, only to find out that everyone is disappointed?
Step one should be to make sure your credit is what you think it is. The Fair Credit Reporting Act allows you to obtain one free credit report every 12 months. Visit the site or call 877-322-8228. This will only take a few days to do and it’s worth waiting for.
Okay, you’ve found out that there are no surprises with your credit report. Maybe it’s even better than you thought! It’s time to find a lender. There are options: traditional lenders such as the local bank or credit union and mortgage brokers who have access to many different lenders with different loan programs. Traditional lenders may not be able to work with you if you have an issue with your credit or maybe your income reporting. Bottom line – shop around for the best loan package (and interest rate) for your unique situation.
The amount you have available for a down payment will be a big consideration when talking to a lender. Whether you have the traditional 20% to put down or are looking for VA, FHA, USDA low or no down loans, don’t give up if the first lender you talk to isn’t able to help. And don’t forget the tax credit for first time home buyers! While the financing crisis (fiasco) has many people convinced there is no money to borrow or that they would never qualify, that may not be the case. There are some great loans out there and you need to be pro-active to find them! (by the way, I can help you!)
There are two rules of thumb normally used to determine how much you can afford:
1 – your maximum monthly mortgage payment should not exceed 28% of your gross or pre-tax income
2- your maximum debt (including that mortgage payment) should not be more than 30% of your gross income
Normally, you will first get “pre-qualified” where a lender or mortgage broker will tell you how much of a mortgage you can afford. “Pre-approval” is the written guarantee from the lender that they will grant you a loan up to a specified price (subject of course to appraisal and other conditions that will be written out).
Once your loan is approved and the interest rate is guaranteed (“locked in”) for a specific period of time, it’s time to call your Realtor and start shopping!
