We recently received some questions in regards to how to get pre-approved for a mortgage. This is especially important when it comes to coming up with a budget of what you can afford if you are looking to purchase a new home. This should truly be the first step before you fall in love with a house that you cannot afford, no matter how much you want the numbers to work. The pre-approval helps you to figure out how much you qualify for a home loan. It will include a maximum amount of money you can spend on a new home, along with your interest rate and loan terms you will likely get. The pre approval is not one hundred percent set in stone but it will be extremely close. The more information the lenders have to get you pre-approved, the more accurate everything will be. So if the lender has a very clear view on your financial status, which includes your credit score, income, etc. the maximum loan amount, interest rate, and loan terms will be more accurate.

Due to the current climate of the world, most lenders offer a pre-approval process completely online. If you would prefer to do it over the phone or in person, you do have that option as well. The more information you have available and have access to, the easier and quicker the process will be for you.

To start the pre approval process, in order for the lender to get a credit report, you will need to provide a great deal of personal information. This type of information includes your social security number, all financial information, and all loan information as well. The lender will run your credit score and credit history. You can get pre approved for as many lenders as you want as the pre approvals are not binding.

Other information that is needed will include your income and assets. You are welcome to give us a call and we will give you the exact list of documentation that will be required and expected to give. Keep in mind that while most lenders have the ability to give you an (almost) instant pre-approval, it is possible that it could take up to sixty days to complete a manual processing approval. So be sure to give yourself an adequate amount of time to get approved.

Something else to keep in mind is that there is a difference between pre-approval and pre qualified. Getting pre-qualified is very informal as you do not have to submit exact documents and nothing is specifically verified. We recommend you get pre-approved so you can have an accurate sense of your budget.

Last week we gave you some important reminders as to what to look for when it comes to purchasing a home. Last week we discussed the importance of making sure you had a budget in mind that you could afford. We also reminded you that due to the current competitive market, it may be wise to have some extra money set aside if you want to try to “out bid” someone who may be looking to purchase the same house as you. We also discussed the importance of making sure you look at the location of your potential new home and what it will mean for you; for example, how long it will take you to drive to work, to get the kids to school, etc.

The majority of people will have an idea of what they want the layout of a potential home to be. However, some people are too zoned into the short term that they forget about the long term. We would recommend you think into the future and take into consideration if you plan to add more children or pets into the family or even if in the future you may be moving an older family member into your home. It is usually less expensive to have a home that can sustain all of your wants and desires instead of having to renovate. 

Speaking of renovation, it would also be a better financial decision to find a home that has most, if not all, of the amenities you want in your home. For example, if you want a home with a particular type of tile or carpet, it would save you money to find a home that has what you want. While it should not be the complete decision maker, it would be easier on your pocket book. 

We have found that the majority of people tend to forget to look into the cost of living in a particular area. This could change from just ten minutes up the road, living in a different city or county. This is where looking into local property taxes and utility bills comes into the picture. Property tax can significantly change from one area to another. Or even if you are moving somewhere that you are required to hold flood insurance. These important aspects are often forgotten to take into consideration. This also ties into not forgetting about looking into homeowners association costs of this is something that may be applicable to you! Not only would this be an additional cost but you may have a particular upkeep or something that is not allowed that does not align with your wishes.

With all of these thoughts in mind, we would recommend you to come up with a list of what is a deal breaker to you and what is not. We do not want you to settle and a home that will not make you happy in the long run. Be sure to look at all parts of your decision making – especially if it will be a “forever home!”

In the past, we have given some points and things to look at when it comes to purchasing a house. But since the market is so hot right now we want to make sure you are reminded of a few factors to be sure you look at when it comes to purchasing a new home. Everyone has their own personal ideas and criteria when it comes to what they are looking for in a new home. You may be so hyper-focused on one criteria that you forget about something else that may be important.

To begin with, while this may seem very elementary and obvious, do not forget how important it is to have your budget planned when looking at new homes to purchase! It is very important you know what price range you are able to look at. It would be quite devastating if you find the home of your dreams only to realize it is too expensive for you. So it is important to get pre-qualified for a mortgage before you start house hunting! Since the current housing market is so competitive, you may want to include some “wiggle room” when it comes to the final price tag. It may be wise for you to be prepared to negotiate and pay more than asked if it goes into a price war with someone else.

First off, this may seem obvious as well, but make sure you take into consideration the location of the homes you are looking at. Take into consideration all of the facets of the location. For example, how long will your work commute be at this house? What do the neighbors seem like? Will it take you a long time to go to the grocery store? If you have a newborn baby, are the streets nearby full of traffic and full of noise? If this is your first home you are purchasing, you may not think of how important it is to look at everything pertaining to the location of the home…but it is so important!

Next week we will continue with our list and give you other ideas as it pertains to decision making when purchasing a new home. Is there anything else you think needs to be added to the list?

Just like anything in life, don’t take the first offer you get! This is true when it comes to refinancing your home as well. And especially true as it pertains to your current lender. We will let you in on a little secret…when it comes to lenders, it is very important that they retain their current customers. So keep in mind that your current lender may not offer you a competitive rate immediately.

When you decide to refinance, ask your current lender for the best rate possible. Be sure to do your homework and know what you will be quoted at a different lender as you will likely not be offered the same amount as a new customer would upon them initially signing up. If your current rate is 4.5% you will probably be offered 4% when you call the first time to refinance. However, a new customer may be quoted 3.5% or even 3% as a rate. Make sure you have this information in your back pocket!

We would recommend that you get a quote from a minimum of at least three lenders – maybe even three different lenders other than your current one. And by getting a quote, we would recommend you call the lender and put in all appropriate information – not sure from a piece of mail or e-mail you may have received from a company. For the most part (and this goes with post advertisements) what is advertised is more than likely the ideal situation in order to get people interested. A company needs a great deal of information from you in order to give you an accurate quote. As long as you have the proper information required, obtaining a quote will not take a great deal of time. We cannot stress enough how important it is to obtain multiple quotes – especially before making a final decision.

Also a part of your final decision should include any and all additional fees. These fees include closing cost, annual percentage rate, etc. Take all of the above into consideration when making your decision to refinance.

With what is going on in the world today, if you catch my drift, many people are deciding to change jobs. There are many different reasons for people to do this. If it is important to you and makes sense for your family, we are behind you one hundred percent! We would like to recommend that if you are in the process of applying for a mortgage, to wait to change your job either before you apply for your home loan. If you change your job while you are in the process of purchasing a home, you may find yourself in a tough situation. When applying for a home loan, your job status is always checked…is your job reliable, stable, and likely that you will continue with it in the future? Also, it would cause less issues if your change of job is an upward move with more money, benefits, etc. If it seems like your new job is not helping you gain anything, your loan application may have some red flags on it.

In most situations, you need a minimum of two years at a job. If you are there for less than two years, your employment history will be looked into further. For example, how frequently you change jobs, if you are unemployed for long periods of time, etc. Some mortgage lenders will look at some jobs as unacceptable and possibly jeopardize you getting approved for a mortgage. These types of jobs would be a job in a completely different field, or switching from a W-2 employee to a 1099 employee, to name a couple.

We know that there are unforeseen circumstances that happen and there may be no other option but to change your job, but if you can avoid changing jobs while in the middle of a mortgage application, we highly recommend it. It would make everything go much smoother!

Did you know that you were able to use a cash-out refinance to pay off debt? If you did not before, you do now! This reasoning is the most common reason that people decide to consolidate their debt. Within the last year, equity rose to just about thirty percent! Not only that, but mortgage rates are still low as well. This would be the time to do this. You would be decreasing your monthly payments but increasing your cash flow. If this sounds like something you would benefit from, we would highly suggest you take a look into it further.

When you apply for a cash-out refinance, it is similar to when you applied for your original mortgage. You will have to have an appraisal of your house done, provide your credit score, credit reports, bank statements, tax documents, etc. If you remember back to when you first applied for your mortgage, there is a whole number of documents that will be requested! And just like when you applied for the original mortgage, you will have to have a closing done and pay for closing costs. If you decide to do a debt consolidation cash-out refinance, the debts you wanted to be paid, will be paid. If you have money remaining after this, you will receive a wire transfer or a check for you to deposit into your bank. Escrow is who would provide the wire transfer or check.

Before you go through all of this, make sure it makes sense for you. Figure out exactly how much debt you are in and how much of it you want to be paid. Then figure out how much money you will be earning throughout the refinance option. If you will be making just a small dent to your debt, is this option the best idea for you? We do not want to discourage you from doing this, but we want to make sure it makes sense and will be worth it in the long run.

If you cannot afford a down payment or closing costs, we have good news for you, in case you were not aware! There is a loan called the Community Seconds loan that is available, if you qualify, that will help you finance your down payment, closing costs, and in some cases, home renovations. How amazing is this? This means you do not have to pay for anything upfront! Again, this is only if you qualify. Basically, it is a second home loan. This loan would be a whole lot smaller than the loan for your entire house.

When it comes to making payments on a Community Seconds mortgage, there are quite a few different ways and options you have to do so. One option is to make monthly fixed payments, right alongside your regular loan. You would make these payments until this second loan is fully repaid. Another option is to defer payment for your second loan for a certain period of time. Once that period of time is over, you would make fixed monthly payments until the loan is completely repaid. A third option is available where you do not have to make any payments at all! However, if you decide to sell the home or refinance, that is when you would have to pay the loan back. There is a fourth option that is sometimes offered where you do not have to repay the loan if you stay in the home for a certain amount of years. As with everything, the terms and situations are different depending on the repayment plan discussed upon qualifying for the Community Seconds loan. They are different depending on the location and program.

Fannie Mae is where this type of loan is offered through. It is a conventional loan that they have set up to work in conjunction with an adjustable-rate or fixed-rate conventional mortgage. If this type of loan is something you are interested in, we suggest you look into it further. Not many people are aware of it and it could greatly benefit someone who might need some extra assistance.

We keep getting questions e-mailed over to us or called in – “if I make ___ amount per year, what is my budget to buy a home?” Unfortunately, there is no easy answer for you! If you have stuck around here for a while now, you probably already know the answer…it takes more than just a salary to come up with a price range for how much of a home you could afford. While your yearly salary does play a role, it is not everything. There are many other factors that play a role in it. To name a few, the following factors play a part: your credit score, how much of a down payment you can afford, and your debt-to-income ratio. If your salary is up there but the funds you have available for your down payment is very low, your budget will likely be different if your down payment was significant.

There are quite a few online resources available where you can calculate a general estimate of how much of a mortgage you could afford. Be sure you have accurate estimates when questions are asked like your credit score, etc. Most of these online resources will also indicate your expected monthly payment as well.

When you are talking about your monthly payment, do not forget to take into consideration your principal, interest, taxes, insurance, and even homeowner’s association fees if applicable. Some of these online resources do not take those factors into consideration and they are important so you know what to expect to pay. When using a mortgage calculator, see if it includes taxes, insurance, interest rate, etc. You want it to include as much as possible so there will not be any surprises. And obviously you can speak to a lender as well to get even more of an accurate number based on your salary and other factors.

More good news for you! There are home loan options for single parents! While there is not a specific home loan for a single parent, there are many programs out there that will likely meet the needs of a single parent. With being a single parent, you only have one income so money is a lot tighter and may be more complicated. Programs are out there that can give you funds toward a down payment, for example. Do not let being a single parent keep you from looking into purchasing a home!

We do know that there are some single parents out there where money is not an issue or even a thought. For those that fall into this category, you will likely be able to put 20% into a down payment and you would get approved for a conventional mortgage.

Unfortunately, we do recognize that not all single parents will fall into this category. Most will not. But do not be discouraged! You still have the ability to be a homeowner. Most lenders will want to make sure you can afford mortgage payments comfortably – along with any out of the ordinary circumstances that may occur from owning a home. Lenders will also want to make sure your debt-to-income ratio is low so you can afford your mortgage payments. Lenders will also look into your credit score and most programs have different minimum credit score requirements.

There are a handful of programs and loans out there that may be flexible or having options for no down payments. All programs will be a little different so you need to find out how much you can afford as a down payment, what your debt-to-income ratio is, and your credit score. Once you know at least these three items, you can look into options that are available and see what you fit into. It also depends what state you are trying to purchase a home in.

We hope after reading this that you are no longer discouraged! It is possible, if you are a single parent, to qualify for a mortgage!

Just because you may fall into a low income bracket, does not mean you will not get approved for a mortgage! Do not make any assumptions when it comes to this. Your income is only one part of qualifying for a mortgage – not all of it. And it certainly is not the most important qualifier for a mortgage! What truly matters most is your future mortgage payments and if you can afford them. Your debt-to-income ratio is what is much more important. If your debt-to-income ratio is low, you will likely qualify for many different loans as the person will likely be able to make their mortgage payments.

Would you believe that there really is no minimum income for any mortgage? Again, if someones debt-to-income ratio is low and both down payment and closing costs can be met, someone would not be denied a mortgage if their income was low…even as low as $10,000 per year! We hope that this is giving you hope if you thought the likelihood of you getting a loan due to low income was low…it is not! 

There are many options available for people into this type of category. These loan types and programs may not be well known or conventional, but there are many programs out there! For example, there is a program available to help law enforcement, teachers, firefighters, and emergency medical technicians! This program is called the Good Neighbor Next Door and is not widely known. This is just another example of making sure you look into all possible programs and resources available! There are even some assistance programs out there that will help someone with their down payment.

If you are still unsure if you will get approved and you want a peace of mind, get pre-approved for a mortgage! This will give you a price range on a house you can purchase. If you need help researching available options for you, please reach out. We would be thrilled to help!