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Questions?
Call (714) 883-0993
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Buying your first home is an exciting investment. When buying your first home, use these guidelines to help qualify for the best home mortgage loan rates and terms available:
- Know what you can afford.
- Most banking institutions require that the mortgage payment does not exceed 30% of your gross income. Look realistically at what qualifying earnings of yours can be substantiated with pay stubs, bank balances and financial statements if you are self employed. Compute the size of loan that 30% of your combined monthly family income will carry, at prevailing interest rates. Divide the loan balance (or mortgage amount) by 80% - 90%. The resulting figure will approximate the sale price of the home you will buy with a 10% to 20% down payment. The difference between this figure and the loan balance equals the size of the down payment you must come up with. Assuming you have the down payment - this is the price range for homes you should be looking at.
- Watch what you say to the real estate agent.
- Unless you specifically have a "buyer agency agreement" with your Real Estate agent, the agent is working for the seller. Whatever you say to the agent (when discussing offers, for instance) - that agent is obligated to pass along to the seller.
- Know your credit rating and all its 'dings'.
- Check your credit rating for errors and "derogatories" before applying. This takes time to correct and, where negative items exist ("dings"), you can often attach a letter of explanation with the loan package that will reduce the negative impact of the derogatory item on the loan application outcome.
- Keep your debt and monthly payments as low as possible prior to applying.
- Along with your income and credit history, the underwriters are going to evaluate the total debt load you must service. The higher your outstanding debt and greater your aggregate current monthly debt payments are, the less chance you have of receiving the loan you want.
- Remember the "cost of owning" a home when planning your household budget.
- Along with the mortgage payment, a home has property taxes, several types of homeowners insurance, maintenance and repairs as part of the total cost equation. Plan these mortgage loan factors into your budget when considering a price range for your new home and new home loan.
- Save for repairs and upgrades.
- At some time in the future, your home will be more valuable than when you purchased it. Rather than increasing the loan balance to pay for remodeling, set aside a small loan payment amount to yourself each month for future home upgrades. Use one of the calculators to see how much remodeling money you can accumulate in 5 years - just by setting aside $200 per month.
- Shop your loan before you make an offer.
- Find a loan agent or loan broker you feel comfortable with. Spend time with this agent explaining your financial situation and what kind of home and area you are hoping to own in. Your loan can be largely pre-approved, subject to certain conditions (LTV, personal income to debt ratio, etc.) before you make an offer. Although it doesn't happen often, sometimes if the seller knows that you are preapproved and the preapproval amount is for a certain sum - this can be used as leverage to lower an impatient seller's price down into your targeted home price range.
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Low interest loans placed against DiTech, Ameriquest and Lendingtree:
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