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Updates & tips
Steps To Buying A Home
The homebuying process can seem complicated, but if you take things step-by-step, you will soon be holding the keys to your own home!. steps to buying a home. Figure out how much you can afford. Shop for a loan. Learn about homebuying programs. Shop for a home. Make an offer. Get a home inspection. Shop for homeowners insurance. Sign papers. Step 1.Figure out how much you can afford. What you can afford depends on your income, credit rating, current monthly expenses, downpayment and the interest rate. How much home can you afford?. Need help with your downpayment and/or closing costs?. Homebuying programs in your state. A housing counselor can help you figure out how to manage and pay off your debt, and start saving for that downpayment!. Step 2. Know your rights Fair Housing. Equal Opportunity for All - brochure. Real News Settlement Procedures Act (RESPA). Borrower's rights. Predatory lending. Step 3. Shop for a loan. Save money by doing your homework. HAVE YOUR BROKER TALK TO several lenders, compare costs and interest rates, negotiate to get a better deal. Consider getting pre-approved for a loan. Step 4. Shop for a home. Choose a real News agent. Wish list - what features do you want?. Home-shopping checklist - take this list with you when comparing homes. Homes for sale (including HUD homes). Fixer-uppers - home purchase and repair programs. Manufactured (mobile) homes. Build a home. If you choose a home in a neighborhood with a Home Owners Association (HOA), be sure to request a copy of the HOA packet, so you can review before closing. Step 5. Make an offer. Discuss the process with your real News agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale. Step 6. Get a home inspection. Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs. For Your Protection Get a Home Inspection. Step 7. Shop for homeowners insurance. Lenders require that you have homeowners insurance. Be sure to shop around. Homeowners insurance. Step 8. Sign papers. You're finally ready to go to "settlement" or "closing." Be sure to read everything before you sign!.
Pre-Qualify VS Pre-Approval
The Scoop on Pre-Qualified vs. Pre-Approved : What's the difference? What does it mean to be pre-qualified?. Getting pre-qualified for a loan gives you an idea of how much you might qualify to borrow. You have not actually applied for a loan and the mortgage banker has only your word on your income, assets and liabilities. None of your information has been verified, the loan amount is in no way guaranteed. You may be given a pre-qualification letter that merely states you are likely to be approved for a mortgage. Getting a pre-qualification is generally very fast and you can even pre-qualify for a mortgage online in only a few minutes. What does it mean to be pre-approved?. Getting pre-approved means that not only have you given the mortgage banker information on your income, assets, and liabilities, but your information has been checked and verified. The mortgage banker may also have pulled your credit report to learn about your credit history and credit-worthiness. Getting a pre-approval letter means that you are likely to be approved for a mortgage and also states the amount for which you may be approved. It carries a bit more weight than a pre-qualification letter. However, getting pre-qualified or even pre-approved doesn't necessarily guarantee that your loan will actually go through. Many things can happen during the process---some lenders may give out pre-approval letters without actually verifying your information or a borrower may not give completely accurate information about his situation.
Mortgage Math
Cash Required Funds required at closing. This is the total of a buyer's closing costs and down payment amount. Total Closing Costs + Down Payment =Cash Required Debt Ratio The percentage of monthly income that can be applied toward monthly long-term debt obligations. Loan programs have different guidelines on debt ratio percentages. Government loan programs typically have higher debt ratio percentages, allowing more homebuyers to qualify for loans. Debt Ratio =PITIO / Total Monthly Income Down Payment The Down Payment can be shown as: • The difference between the Home Sale Price and the Loan Amount • One of the main parts of the "up-front" cash required at closing • A percentage of the home sale price paid at closing. For example, a 20% down payment on a $100,000 sale price is equivalent to a down payment of $20,000 at closing. Home Sale Price - Loan Amount= Down Payment Front-End Ratio The percentage of monthly income that can be applied toward monthly house payments. Each loan program has different guidelines on front-end ratio percentages. Typically, government loan programs have higher front-end ratio percentages, allowing more homebuyers to qualify for loans. Front-End Ratio =PITI \ Total Monthly Income Maximum Loan Amount Sum of the total loan amount and other financed fees. It represents the maximum amount that the lender is willing to offer based on constraints including income, debt, and cash available. This maximum loan amount is set by the lender or by the specific loan product. For example, a lender offering to finance a $100,000 home with a LTV of 97% approves a maximum loan amount of $97,000. The buyer must include the remaining 3% ($3,000 in this example) in the down payment. Home Sale Price × Loan to Value (LTV)%= Maximum Loan Amount PITI Sum of Principal, Interest, Property Taxes, and Insurance payments. For most homeowners, PITI represents the amount of their monthly mortgage payment. Principal+ Interest + PropertyTax +Insurance= PITI PITIO Sum of Principal, Interest, Taxes, Insurance, and Other monthly non-housing costs. Principal + Interest + Property Tax + Insurance + Total Other Costs = PITIO