Student loan payments by themselves are not a detriment. A borrow’s debt to income ratio is calculated as a percentage of their pre-tax income; your qualifying income. And not all loan programs consider student loan payments equally. Most student loans even have multiple repayment plans. Someone might consider changing the payment on their student loans to assist with qualifying to buy a home. Other factors are considered when qualifying for a mortgage loan, so don’t isolate debt and talk yourself out of learning. Maybe consider an income producing property like a duplex or have someone else pay your mortgage for you, or maybe a portion of it. Ask us how.
Pre-qualification does not mean automatic loan approval. Instead, pre-qualifications provide a very rough estimate. Pre-approvals on the other hand are more substantial and take multiple things into consideration such as debt, your qualifying income, financial reserves and your credit profile; not just your credit score. It’s essentially a lending decision only needing a property address. Pre-approval strategy meetings teach folks how to buy. This is something we pride ourselves on. Ideally, this happens before you’re even shopping for a home. Starting with the right strategy promotes smooth dealings from negotiating a purchase agreement all the way through closing. Ask us how.
Technically, a home inspection is an option that you can consider when entering into a purchase agreement. However, being optional is not something that you should be thinking of when considering, “Should I do a home inspection or should I not do a home inspection?” Learning the details about a home’s bones, the structure and potential pitfalls will allow you better clarity as you begin to move forward with the decisions that you are going to make, not only as it relates to the home that you are going to buy, but the financing options that you are going to consider. Ask us how.
It might seem odd to think the first step when buying a home is not looking at a home. Getting your finances in order and understanding the money details associated with how to buy a home should be the first step before you consider looking at homes. It will break through a lot of barriers of how much you can afford, how much money you’re going to need at settlement, what type of loan programs you should consider; essentially how do you qualify. And so while looking at a home is fun, it makes more sense to get dirty in the details of how the money works so you can be more confident in the marketplace and buy a home you are going to enjoy the process at the same time. Ask us how.
Often times I am asked, “What is my downpayment?” as a question to how much money one is going to need when purchasing a home. Downpayment and funds to close are not the same. Funds to close is the product of three things; your downpayment, if one is required for the loan program you’re using, your closing costs and your prepaids which include taxes, homeowners insurance, prepaid interest, etc. Those are the three things necessary to understand funds to close and a mortgage transaction. Ask us how.
Even though it is true better credit or great credit will get you better loan terms, it is not true that you need great credit to purchase a home. In today’s mortgage market, one will qualify for a loan and get very, very good terms, or you’re simply not going to qualify. When considering purchasing a home while credit is important, the most important thing to do is to evaluate your credit, your income and your financial reserves to see what loan program will fit best. Ask us how.
Not only is putting 20 percent down to purchase a home not required, it is often times not recommended. In today’s mortgage market, the price of mortgage money, the amount that a payment will cost compared to the loan amount is quite cheap. So one might consider putting down less money to purchase a home and have more money for rainy day funds, with putting down as little as no money to sometimes five percent. Ask us how.