Choosing The Right Home For You - Choosing a home to purchase can be a daunting task. Most buyer want to know make a wise decision when purchasing a home. There are a lot of factors buyers need to take into account when choosing a home to purchase. The importance of each factor for each person or family will be different. So, Home Buyers before looking for a home should write down what factors they value the most; neighborhood, schools, price, taxes etc...Do I need a home warranty? - A home warranty protects homeowners against unexpected repairs of major systems and appliances in the home that could be otherwise costly to the homeowner.
How do I know which mortgage is right for me? - Finding the right mortgage is more confusing than ever with the numerous home loan programs available today. So, how do you choose the right loan to fit your needs? First, you have to decide what you need now and in the future. This will help you get started on determining the right loan program that fits your situation the best.
Sitting down with your mortgage professional to go over all benefits of each program will help you decide which program works best for your financial needs. Having an understanding of what you want to accomplish in the long term will help you choose the right mortgage for your needs.
Many people think that a 30 year fixed rate loan is best for them. They like not having to worry about whether or not their payment will change in the future. What these people usually don't realize is that you can get an adjustable rate mortgage (ARM) that is fixed for the first several years. This initial fixed rate period usually has a lower rate than a 30-year fixed rate. Since most people only stay in one loan for a few years anyway, you can actually save money with an ARM over a Fixed Rate Mortgage.
There are many different mortgage loan programs available today. Choosing the right type of mortgage loan can make a drastic difference in your monthly payments.
How much can I borrow? - Your loan officer and/or broker will tell you how much you qualify for after they review your application and pull credit. The loan amount depends on income and debt ratio.
The loan amount depends on income and debt ratio
When you are purchasing your house, the first thing you should consider is how much monthly payment you could handle. If you set your monthly payment limit, then the loan officer can show you how much money you can borrow through different types of financing options.
The Debt Ratio is calculated by dividing the borrower's monthly gross income by the borrower's total monthly expenditures.
When refinancing your home, the amount of money you are able to borrower is directly related to your FICO score, the amount of equity available to borrow from, and your Debt to Income Ratio. People with higher FICO scores can borrower to a higher LTV than people with lower FICO scores. No matter what your FICO, the higher the Loan To Value, the worse the interest rate will be on the refinance. Generally, there is no difference between 30% and 50% LTV, but there is a HUGE difference between 70% and 90% LTV. The closer you get to the actual value of the home, the more risk it puts on the lender. They will require more from you in higher FICO scores, provable income, provable assets, and will apply more of a penalty towards you in terms of your interest rate.
If you're pulling the cash out for investment, make sure your rate of return is higher than both the additional interest you'll pay as well as the cost of the refinance.
Just because your mortgage professional says that you can borrow a certain amount, it does not mean that you have to find a home for that price. You need to be comfortable with your mortgage payments and loan program. You will have monthly expenses that are not factored into your debt ratio, which could make making your mortgage payment difficult some months.
Different home loan programs may allow you to borrow more or less depending on the guidelines, rates and repayment methods. Some examples of this are: A 3/1 ARM may allow you to borrow a little more than a 30 year fixed rate mortgage since it will usually have a lower interest rate. An interest only loan may allow you to qualify for more of a loan than a regular amortizing mortgage for 30 years also since it will have a lower payment. A 20 year fixed rate loan may not allow you to qualify for as high of a loan as a 30 year fixed rate loan since the payment on the 20 year mortgage will be higher.
When factoring how much you can borrower and how much you can afford you should pay close attention to unforeseen cost down the road. Buying a home at the top of your budget can cause you financial hardships down the road if there are any issues that come up. You do not want to be house poor, which means all you can afford every month are the essentials and house payment, this will not leave you any room with other expenses.
If your debt to income ratio is too high but you are comfortable with your monthly payment you could consider a "No Ratio" loan.
No Ratio loans usually require a strong credit history, good employment history, or a sizable down payment. The added risk of a no ratio loan will mean a slightly higher interest rate than a full documentation loan.
There are several types of loans in the industry today No doc, Lite doc, Stated Income the most important thing to remember is not how much you can qualify for but how much you can afford to PAY for monthly, A home can be your greatest investment, losing it can be your worst.
What to consider when buying a home - What should you consider and what factors are important when you are looking to buy a home. One item that should be important is the school district you will be moving into. If you have children that will be attending school this may be a major determining factor on where you decide to move. Obviously you would want to try and pick a school system that ranks well and will provide your children with a quality education. Consult your local loan officer to find out information about school systems and to help with all of your mortgage needs.
Another thing the borrower should research is future home value potential. The neighborhood might be quite and crimeless. However, properties in some areas actually depreciate over the time. Ask your agent if he could provide the history of the property appreciate in the area you looking to purchase your dream home.
When you have finally decided on a new home it is time to order a home inspection and appraisal. A home inspection will reveal any material defects in your new home and should give you a good idea as to which systems need attention or repair. The appraisal will usually be ordered by your loan officer and will determine the Fair Market Value of your home. The appraisal will analyze the chain of ownership and recent sale history as well as provide comparable homes in your area of similar size, age, and build style. Both the appraisal and home inspection offer 3rd party opinions and should be carefully studied prior to taking ownership of your new home.
Many states not only rank schools based on a number of factors, but make the reports available online. Scanning many schools report cards online can save you a lot of time compared with calling each school to get a copy of the report.
