Get pre-approved online before you start looking. Not only do real estate agents prefer working with pre-qualified buyers; you will have more negotiating power and an edge over homebuyers who are not pre-approved.
Set a budget and stick to it.
Know what you really want in a home. How long will you live there? Is your family growing? What are the schools like? How long is your commute? Consider every angle before diving in.
Make a reasonable offer. To determine the fair value of a home, ask your real estate agent for a comparative market analysis of listings and sale prices of other houses in the neighborhood.
Choose your loan (and your lender) carefully. For some tips, see the question in this section about comparing loans.
Marcel Garcia, the founder and CEO of 818 Mortgage, explains that you should, “Consult with your lender first, even before paying off debts. You may qualify even with your existing debt, especially if it frees up more cash for a down payment. Plus, in some cases, completely paying off debts can actually lower your credit score.”
Keep your day job. If there is a career move in your future, make the move after your loan is approved. Lenders tend to favor a stable employment history.
Do not shift money around. “A lender needs to verify all sources of funds. By leaving everything where it is, the process is a lot easier on everyone involved,” Marcel at 818 Mortgage explains.
Do not add to your debt. If you increase your debt by financing a new car, boat, furniture or other large purchase, it could prevent you from qualifying.
Timing is everything. If you already own a home, you may need to sell your current home to qualify for a new one. If you are renting, simply time the move to the end of the lease.
How Much House Can I Afford?
How much house you can afford depends on how much cash you can put down and how much a creditor will lend you. There are two rules of thumb:
With no debt, you may be able to afford a home that’s between 2 and 2 1/2 times your annual gross income.
Your monthly payments (principal and interest) should be 1/4 of your gross pay, or 1/3 of your take-home pay. But in high value markets, like California, “you may be able to push your total all-in payment up to 50% of your debt to income,” Marcel Garcia at 818 Mortgage explains. “Because of this, the best advice I can give anyone is to speak to a licenced loan officer like the ones at 818 Mortgage.”
The down payment and closing costs – how much cash will you need? Generally speaking, the more money you put down, the lower your mortgage. You can put as little as 3% down, but more typically as low as 5%, depending on the loan, but you’ll have a higher interest rate. Furthermore, anything less than 20% down will require you to pay Private Mortgage Insurance (PMI) which protects the lender if you can’t make the payments. Also, expect to pay 3% to 6% of the loan amount in closing costs. These are fees require to close the loan including points, insurance, inspections and title fees.
To save on closing costs you may ask the seller to pay some of them in the form of seller concessions, in which case the lender simply adds that amount to the price of the house and you finance them with the mortgage. A lender may also ask you to have two months’ mortgage payments in savings when applying for a loan. The mortgage – how much can you borrow? A lender will look at your income and your existing debt when evaluating your loan application.
“The first step to home ownership is by speaking to a qualified local loan officer,” call Marcel Garcia at 818 Mortgage for a free one-on-one consultation.
Company Name: 818 Mortgage (AKA: 818Mortgage)
Contact Name: Marcel Garcia
Email: marcel@818mortgage.com
Website: 818mortgage.com
Country: USA
States: California, Arizona, Colorado, Florida, Idaho, Illinois, Montana, Nebraska, Oklahoma, Oregon, Tennessee, Texas, Utah, and Washington
Clients: First Time Buyer who need Pre-Approval for a Home Loan. Home owners who are interested in: Refinance, Cash-Out, HELOC (Home Equity Line of Credit), DSCR (investment property loan) and Reverse Mortgage.
Loan Programs: All traditional Home Loans / Qualifying Mortgages (QM), Conventional and FHA. As well as Non-QM: Stated, Bank Statement, P&L, CPA Letter, Business Bank Statement, and Hard Money Loans.