Lending Misconceptions Keeping You From Buying Your Dream Home
Are you a renter who is looking to purchase a home of your own? If so, you've come to the right place!
Many of our clients have said to us that they wish they would have made their purchase years ago, instead of renting for a long period of time. With interest rates as low as they are, we want to encourage all the renters out there to buy now! Low rates mean you have more spending power as a buyer, which is perfect for first-time home buyers looking for the right fit.
Many potential home buyers are waiting until they save up for a large down payment to avoid paying Private Mortgage Insurance. The fact is, you don't need to have 20% down to buy. There are many great low down payment packages out there, such as FHA loans (3.5% down) or conventional loans with as little as 3% down. One of the most popular packages is a 5% down conventional loan with no mortgage insurance!
Nowadays, it's very common for people to monitor their credit. Many people don't want their credit pulled until they are absolutely ready to buy because they fear their score is going to be impacted. This is another misconception - there is no set formula detailing how much your score is impacted by being pulled. If you have pretty good credit as it is, the impact of having a lender take a look at it is going to be minuscule because you've already proven you can manage your own credit risk. If your credit isn't great, give us call and we can help you manage it a bit better.
If you have any questions about the minutiae of lending, or if you want more information about whether you're eligible for a home loan, please don't hesitate to reach out to us. Interest rates are at historic lows, so you don't want to miss out on your chance to make the dream of homeownership a reality!
What Are Loan Officers Asked Most Often?
The number one question that we get asked every day from potential clients is, “What is your current interest rate?”
If only that question had a simple answer. If it were as easy as just spouting off a percentage, you might not even need us. That’s because understanding and getting your interest rate is a process. Rather than quote you an interest rate, we like to spend a few minutes going over what exactly is involved in coming up with an interest rate. There are 4 important factors that determine your interest rate. They are:
1. What is your credit score?
2. What type of loan program do you want?
3. What can you afford for a down payment?
4. What type of property are you getting?
We want to help educate you and guide you in determining your interest rate. We don’t want to give you a quote on the phone by jumping to conclusions, only to have to backtrack what we said based on the information you give us. When you buy a home, you are making one of the most important purchases of your life, so you want to be able to trust the people you are working with. You also want to make sure you know what kind of home you can afford based on that information, so you know what kind of home you should be looking for.
If you have any questions for us, feel free to give us a call or send us an email. We look forward to hearing from you!
Raise The Roof! Fannie Mae Has Raised Their DTI Ceiling!
Have you ever been rejected for a mortgage due to your debt-to-income ratio? Or know someone who has? Well good news: starting July 29, Fannie Mae is raising the DTI ceiling to 50 percent! Currently, it sits at 45 percent.
Never heard of DTI? Debt-to-income ratio takes your gross monthly income and determines what percentage of that goes towards any debts that you may have – credit cards, loans, etc. including what your new mortgage payment would be. You can find a free calculator here. No need to get alarmed quite yet if your ratio is higher than 50 percent. Fannie Mae, Freddie Mac and the Federal Housing Administration all have exemptions allowing you to buy or insure loans, even if you have a DTI above 50 percent. Word of advice, however, high DTIs are viewed more critically by lenders than any other factor – including credit score. The reason is simple: more monthly debts = a greater risk of late mortgage payments. Having a lower DTI does not mean that you’re automatically good to go, however. There are still several other factors involved in the approval process, such as your down payment, your credit score and more. Want to find out what loan you can be approved for? Give us a call today!