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10 Do's and Don 't for getting an ideal Mortgage
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Here’s the good news: More people than ever can buy a home.
Now the bad news: It’s going to take a lot of patience, restraint and some careful planning to get there. That loan officer sitting across the table won’t look kindly on the new Lexus you bought or stack of credit card bills on the kitchen counter. And if you’ve only managed to put away $1,000 in savings by then, it’ll be time to forget about the $300,000 beach house.
To pull the purchase off, try heeding some of the guidelines below. It may not always be fun, but doing so will help get you where you want to go.
Pay your bills and start saving. No. 1, pay your bills on time. This is the most important impact on your credit application. Another thing, of course, is savings. People should have a good disciplined savings pattern.
Everybody is coming into the real estate market with a different perspective and level of experience. But some general rules apply pretty much to anybody when it comes to getting the money to buy a home. So here are the most important rules.;
Five do’s
Make loan and other debt payments on time, especially over the months before your mortgage application. Every 30-,60– or 90-day delinquency on a loan or credit card is going to reduce the credit score for the lender as part of the loan file. That score, in turn, will determine how good a loan you get—if you get one at all.
If something has to be missed, miss the credit card payment first, followed by the payment on any installment loan you might have and finally, the payment for an existing mortgage. It will give the most weight to the performance of another mortgage, for example, then the performance of something like an auto loan, which features fixed payments and a fixed rate the way many mortgages do. Lastly, it would evaluate the payment performance of so-called “revolving” loans, like credit cards, which features variable payments that fluctuates with the outstanding balance.
Consider paying off more debt and putting down a smaller amount at closing. The move leaves borrowers with larger mortgages, but it will allow them to replace non tax-deductible, high-interest rate debt with lower-rate mortgage debt that features deductible interest.
Get the mortgage first if multiple financial obligations are going to pop up in the near future, such a new applications for credit cards, can hurt a borrower’s credit score, especially if they’re filed in the months prior to the home loan review process.
Increase the size of the down payment you’re able to make by saving as much as possible, as often as possible. Don’t put savings into something volatile, such as an individual stock. Evaluate money market or other accounts that offer reasonable rates of return, automatic payroll deductions or other financial incentives to save.
Five don’t’s
First off, don’t make any big purchases over the next couple of months. A significant debt such as a $15,000 auto loan will look bad to the mortgage lender’s credit scoring systems. Your total debt should be no more than 36 percent of your gross monthly income.
Don’t try shooting for that 6 bedroom home if it’s going to be too much of a stretch in your current budget. Lenders consider what’s known in the industry as “payment shock” when approving loans. Somebody who goes from a relatively small monthly housing payment to a huge one either won’t qualify for a mortgage or will end up having to cover too much loan with too little money.
Don’t just get pre-qualified for a mortgage, get pre-approved. To get pre-qualified, a borrower need only submit credit, income and debt information voluntarily to a mortgage broker or lender. Before they can get pre-approved, however, home buyers must allow their lenders to pull creditr reports, check debt-to-income ratios and perform other underwriting steps. That put a borrower much closer to obtaining a loan and locking in a rate and term.
Don’t forget what kind of money personality you have when getting a mortgage. By taking out a 30-year fixed rate loan rather than a 15-year mortgage or even shorter and investing the money saved on monthly payments, you might earn a higher return on your money in the long run. But that approach won’t work for people who spend any cash laying around on dinner and movie twice a week. They can force themselves into saving and accumulating equity faster by going with the shorter term and higher payment.
Last but not least, don’t forget that homeownership brings with it many burdens. The cost of defaulting on a loan is much greater than the penalty of missing a rent payment.
Tineka Klaverstyn who is associated with Prudential California Realty will be able to assist you with mortgages and many more of your real estate needs.
10 TIPS FOR FIRST TIME BUYERS
Each year more than 40 percent of all homes are purchased by first-time buyers according to the National Association of REALTORS®, a percentage which should offer some comfort if you’re about to buy a first home. Others have done it, others are doing it, and you can too. But like most things, there are ways to make the process easier. Here are 10 baseline strategies to make that first purchase a good experience:
Think credit. Poor credit will make you a bigger risk in lender eyes—and more risk means higher rates and steeper monthly mortgage costs. Make a point of paying credit card bills, auto loans, rent, and other payments on time, all the time, and in full.
Consider taxes. When you buy a home mortgage interest and property taxes are generally deductible from income taxes. This means while monthly housing costs may be larger when you own than when you rent, what you save in taxes can make up some or all of the difference. For details, speak with a tax professional.
Know the Sales Associate’s role. Real Estate agents are the center of most property transactions. It’s important for you to know what a real estate professional does, who is represented, and how the system works. The professional Associates at PRUDENTIAL CALIFORNIA REALTY can assist you through the process.
Location. Consider what location will work best for you. Look at your needs, the needs of household members, and your preferences in terms of commuting, shopping, recreation, and other factors that are important to you.
Home Inspection. Plan on getting a home inspection as part of any offer you make. A professional inspection can help you understand the condition of the property and the repair bills you are likely to face in the next few years.
Financing. Look into the financing process as soon as possible. Get pre-approved so that you generally know how much you can borrow, what you can afford, and so owners will see you as a serious buyer.
Save. You’ll need money for a down payment, closing costs, moving, and other expenses. Put off trips and luxuries until after you’re in your new home.
Financial Option. Examine the different financial options which are open to you—consider FHA, VA, and state-backed loan programs which require little down and have liberal qualification standards.
Look for gifts and grants. According to NAR, 22 percent of all first-time buyers receive gifts from relatives and friends. Some companies offer grants and other companies incentives to employees who are buying a first home. Community groups may also have programs and financing in place for first-time buyers, while the federal government has established special programs for teachers and police officer
Timing. Start now, take your time, and ask as many questions as you like. Being a first-time home buyer may be challenging, but millions of people do it each year—and you can too!
Many resources are available to you. For buying tips, financial information, and all other questions concerning the real estate, please contact me at the above address; e-mail me; visit our web site .
Tineka Klaverstyn,REALTOR®
Direct: (209) 823-0375
Office : (209) 823-7710
Cell : (209) 484-4260
www.PruCalifornia.com
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