Buying a home isn’t always easy as some may have you believe. There are hurdles to jump before you become a homeowner. You need to be well-prepared for these challenges if you plan on dealing with them with any degree of success.
Your best bet of finding the most suitable home at the most reasonable price is by working with a real estate professional who not only knows their way around the process but is also looking out for your interests first and foremost. See Your Trusted Home Buyers different locations to learn the options available.
However, even with most knowledgeable and experienced real estate professional on your side, you’re still going to run into some common problems. Let’s look at some of them.
The down payment
Like most other homeowners, you’ll need to get a mortgage to finance the purchase of your home, unless you’re incredibly wealthy. If you’re a veteran, you might be able to access a VA loan in which you’re not required to make a down payment. Majority of other mortgage facilities require the borrower to make a down payment, which ranges from three to fifteen percent of the sale price of the home?
Your FICO score
To qualify for an FHA mortgage, you need a FICO score of 620 and above. For conventional loans accompanied by mortgage insurance, you need a score of at least 720. You can get a conventional loan without insurance if you have a FICO score above 620 but the pricing may not be favorable.
If you don’t know your credit score, you can find out by asking the lender to obtain your credit report. You can also get the score online, but it may vary from the score obtained by your lender. Lenders obtain credit scores from three credit reference agencies and use the middle score.
For most mortgage lenders, you can qualify for a loan if your front-end ratio is 33% or less. This means that the sum of your monthly mortgage payment, taxes, and insurance should be 33% or less of your gross monthly income.
It’s even trickier with the back-end ratio. In this case, the lender takes the sum of your PITI payment and all your other recurring monthly debt payments. Depending on the lender and the loan, that sum should be between 41 and 50%of your monthly income for you to qualify for the loan. The back-end ratio should be 41% or less for you to receive mortgage insurance.
Other loan requirements
The underwriting process can be stressful as the underwriters will examine your file and then make some demands. Whether or not you find the demands upsetting, just provide the documents. The underwriter’s demands go further than simple documentation. They take into account many factors.
For example, you may have a former spouse who owned a home that was short sold or foreclosed. You and your new spouse may be disqualified from obtaining a mortgage if your home is still on the foreclosed mortgage.
December 24, 2018