Sunday, November 3, 2013
Simple Home Financing Advice For The Borrower
There is a lot of home financing advice available today and with banks being more cautious about lending, it can be very beneficial to heed much of it. A borrower can avoid some of the headaches with getting a mortgage by heeding some of these tips.Preapproval for a loan can shorten the lending process. Many mortgage lenders will review all of the home shopper's financial information even before he has decided to make a bid on a house. The lender can even help the potential buyer determine what his price range should be. Before you start shopping for your new home, talk with potential lenders in order to determine the options that you have available, and then start the pre-approval process so that things move quickly once you find the home that you want to buy.Nearly all mortgage lenders will examine a person's debt-to-income ratio prior to lending a potential borrower any money. To know how much an individual will qualify for, he needs to understand his debt-to-income ratio. A person's monthly mortgage payment, including principal, interest and taxes, should not exceed 28 percent of his monthly income. His overall debt payments, including student loans, credit cards and medical bills, should not exceed 36 percent of his total monthly income.Even though it can be exciting to shop for furniture and appliances, these major purchases will show up as increased debt on the potential buyer's credit report. A lender may run a last minute credit report prior to the closing date. It is important to avoid any purchases that could change the debt-to-income ratio or cause worry. Once the home purchase has gone through and the financing is taken care of, then you can start shopping for the furniture and appliances that you need for your new home. Also, keep in mind that you don't have to buy everything right away, you can slowly furnish your home as the money is available.Prior to the closing date, it is also recommended that the potential buyer not make any sudden changes in career. Fluctuations in income can worry the bank and the seller, so that the buyer could lose the house. He should wait to change jobs until after all of the paperwork is signed. Even then, it is a good idea to make sure that he can still afford the home if he decides to make a switch.Shop around for the best rate. The buyer's primary bank may not be the one that is best suited for his mortgage, so looking around for other options may provide alternatives that offer cheaper financing. A lower interest rate means a lower monthly payment or being able to afford a higher loan. The individual should go to several different banks and get quotes.Understanding debt-to-income ratio, getting pre-approval for a loan, shopping around for the best rate and not making drastic moves that will alter your credit score is home financing advice to those seeking to obtain a mortgage. Each of these will help greatly with the process. It could also help put an individual in the home of his dreams.