Everyone is wondering these days – how do I qualify for a mortgage? Or can I qualify for a mortgage?!! If you are a first time homebuyer, it can be enough to keep you from even trying! I have taught first time homebuyer classes and sometimes I would refer to qualifying as plan on giving me everything you have including the kitchen sink!! We try not to make it too difficult but sometimes we need a lot of information and believe it or not, there are reasons behind our questions!
When I first talk to someone about buying a home, I ask several questions. They help me know what you are looking for and how I can best help you. One of the most important questions for you and me is "what are you comfortable with in a house payment?". That is important has it helps give me a clue what you want to spend. Most people are conservative with that number and that is good.
If you are concerned about your credit report, it helps to talk to a loan officer before you think about buying. That way we can go over your credit report and tell you what you need to do to fix any errors on your report. Sometimes people tell me that they can't buy and we look at their credit report and it is just fine!
We will look at your income and figure out what you can afford to spend. There are qualifying ratios that we have to use. If your income is $3000 per month, your total debt including your mortgage payment should be between 41 and 45% of that (or $1350) – that includes your house payment, any car loans, student loans and credit card payments. If you can keep your house payment at about 30-33% of your income, that is ideal. Sometimes we can't use all of your income – if you get commission or overtime and don't have a history of it, we may not be able to use it in qualifying, but it will help you know that you can make the house payments.
The days of zero down are about gone so plan on needing 3.5 – 10% for a down payment. There are some down payment assistance programs and sometimes family members can give you a gift towards your down payment. We also need to be able to verify the money that you are using for closing, so if you are saving money, you may need to document where that money came from. There are still a couple of programs that allow zero down – VA loans and rural housing programs.
When you write your purchase agreement, you will write an earnest money check – that check does get cashed after your offer is accepted. I have had people surprised by that in the past. Frequently your loan officer will want to collect money for the appraisal. Both the earnest money and the appraisal fee will be credited to you at closing towards your down payment and closing costs.
Getting a preapproval is not as easy as it was a couple of years ago, but it is still very possible! Don't be afraid to talk to a lender and find out what you can do. If the time isn't right today, we can tell you what you need to do to get ready to buy a home.
Leslie Vanderwerf, Advisors Mortgage - lvanderwerf@advisorsmtg.com – Website
