The Quick and Easy Guide to Determining How Big of a Mortgage Your Family Can Afford

The Quick and Easy Guide to Determining How Big of a Mortgage Your Family Can AffordAre you shopping around for a new house or apartment? One of the key considerations you will need to make is figuring out how much you want to invest in your new home. Below you’ll find our quick and easy guide to determining just how much “house” you can afford. Let’s get started!

Start By Making A Proper Budget

The first thing you’ll want to do is sit down and get a full budget put together. The easiest way to get the process started is to begin with two lists: income and expenses. For the income list, write down the amount of money your family brings in each month after taxes. If you have side income sources or extra income that tends to fluctuate over time, use the average amount for the past six months.

For the expenses list, write down all the spending that you do each month. Start with the major, stable items like rent, utilities and the like. Then work your way through to discretionary spending like dining out and other sources of entertainment. If it helps, go through your bank and credit card statements to ensure that you are not missing anything.

Once you have an accurate budget, you’ll know exactly how much you can afford to pay toward your mortgage payments each month.

Figure Out How Much You Can Put Down

Next, you’ll need to think about how much cash you want to pay as a down payment on your home. The larger the down payment you can afford, the smaller amount of mortgage financing you’ll need. While it might seem like a good idea to put as much as you can down, there are some things to consider. Any money you put against your down payment is going to be unavailable to you, which reduces your financial options. You’ll also lose the opportunity to invest it, which means missing out on potential returns over time.

Determine How Much House You Actually Need

Finally, give some thought as to how large or luxurious a home you want to buy. For example, if you have a small family and don’t need a large four- or five-bedroom house, you can instead opt for a smaller but more luxurious home. Conversely, if space is a priority, you may want to forego the high-end options to ensure you have enough room.

When you’re ready to explore your mortgage options, we’re ready to help. Contact your trusted mortgage professional at your convenience. We’re committed to helping you purchase the home of your dreams.

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Understanding What a “Piggyback” Mortgage Loan Is and How It Works

Understanding What a As a potential homebuyer who is new to the market, many of the terms and mortgage products available to you can be more than a little confusing. Piggyback loans might be a little less familiar than many other options, but if you’re ready to jump into the housing market this type of mortgage can be useful for you. If you’re hoping to invest in a home sooner rather than later, here are the details on this type of loan.

What’s A Piggyback Loan?

While most mortgage loans require one loan and one lender, a piggyback loan is used for homebuyers who don’t have 20% to put down but want to avoid private mortgage insurance (PMI). Because a mortgage with less than 20% down will require the homebuyer to pay PMI, a piggyback loan can assist in avoiding this. For example, in the event that the homebuyer is putting down 10%, their primary mortgage will cover 80% of the purchase price while the piggyback loan will cover the remaining 10%.

What Are The Requirements?

Since there have been many issues with piggyback loans in the past, there are more requirements for this type of loan than there used to be. While it varies from lender to lender, most homebuyers will be expected to put down at least 10% in order to qualify for this loan. In addition, they will be required to have a good credit score to ensure they are a good risk. While the debt-to-income ratio will fluctuate from lender to lender, potential homebuyers will have to prove that they can make their monthly payments.

Is This Loan Right For You?

It’s important before deciding on a piggyback loan that it’s the right choice for you. Since a piggyback loan will require you to pay down two different loans, it means that you will not be able to tap into your home equity in the event that you want to free up funds. It can also put home ownership in harm’s way if there are any financial setbacks. As well, while PMI can be canceled after the equity in your home is at 20%, a piggyback loan does not provide this option.

A piggyback mortgage can be a good option for homeowners who want to get into the market, but it’s important to determine if it’s a financially solid choice before wading in. If you’re currently getting prepared to buy, contact your trusted mortgage professionals for more information.

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Honesty Is the Best Policy: Why You Need to Be Truthful on Your Mortgage Application

Honesty Is the Best Policy: Why You Need to Be Truthful on Your Mortgage ApplicationThere are few things better than finding your dream home and being able to afford it, but simply because you’ve found the perfect place doesn’t mean you should stretch the truth. It might seem tempting to polish your mortgage application a little in the hopes of making a better impression, but here are a few reasons why you should stick to the truth when signing off on your home.

Your Credit History Tells All

It can be tempting to bump up your salary or make some hefty deposits into your savings account. However, lenders will be taking a look at your financial history by way of your bank statements, credit report and paystubs so they’re likely to discover any erroneous details. If you’re not honest about your financial situation, the lender may suspect that you’re not a reliable buyer. Not only that, making false statements about your finances may give you more home than you can really afford, which can cause setbacks down the road.

Mortgage Fraud Is Still Fraud

A little white lie on your mortgage application might not seem like such a big deal, but because you are painting a picture of yourself that is not true, this can actually be considered mortgage fraud. While there are mistakes that can be made on any mortgage application given all the details required, it’s very important not to mislead the lender or home seller on purpose. It may not be common, but mortgage fraud can be punished with hefty fines or even prison time.

A Bad Way To Begin

There’s nothing like the feeling of moving into your newly-purchased home and feeling enthusiasm for all the things it entails, but being dishonest about your financial situation can sully that. A lie may just be a small detail, but mortgage lenders look at a variety of factors to ensure you’re a good fit for a loan that will stay manageable month after month. While a minor mistruth may seem insignificant, it disables lenders from being able to assess if your financial situation is right for the home you want to purchase.

It may be enticing to fudge a few details on your mortgage application, but there can be serious implications involved in not being honest about the information on your application. If you’re currently in the market for a home, contact one of our mortgage professionals for more information.

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Are You ‘Mortgage Pre-approval Worthy’? Learn How to Assess Your Finances in 10 Minutes

Are You 'Mortgage Pre-approval Worthy'? Learn How to Assess Your Finances in 10 MinutesFinding the right home and the right mortgage can take a lot of time and energy, so it’s important to consider whether you’ll be prepared for approval before diving into the process. Whether you’ve had some financial setbacks or you just want to have an idea ahead of time, here are some ways to quickly determine if you’ll be pre-approved for a mortgage.

Do You Have A Down Payment?

You may have heard that the ideal down payment amount is 20% of the cost of the home, but this doesn’t mean you have to have this amount. However, it is important that you have a significant chunk of change put away so that it can signal to the lender that you’re financially sound and will be able to come up with your monthly payment. A down payment will not only minimize the amount of money you owe the lender each month, it will also show that you know how to save and can be trusted with a significant financial investment.

Determine Your Credit History

Many potential homebuyers have financial hiccups in their history, but it’s how they’re dealt with that determines the future. While you may have considerable issues getting a mortgage approved if you’re not paying your minimum payments on time and have debt, by making this change, you can have a positive impact on your credit history in a matter of months. You may also want to get a copy of your credit report to ensure there are no errors that have adversely impacted your score.

Do You Have A Solid Employment History?

It’s very important to have a solid work history in the event that you’re applying for a mortgage, as this will signal to the lender that you have the funds to make your monthly payment. Keep in mind that it’s good to have at least 2 years of solid employment under your belt, and you’ll need to provide paystubs. If you’re self-employed or your recent job opportunities have been sporadic, this can cause issues with getting pre-approved.

It can take a lot of time to find the right house and the right lender, but if you have a solid history of employment and a sizeable down payment you’re well on your way to pre-approval. If you’re preparing for purchasing a home and would like to learn more, your trusted mortgage professionals for more information.

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Did You Know: 3 Reasons Why Mortgage Pre-approval Should Be Your Very First Step

Did You Know: 3 Reasons Why Mortgage Pre-approval Should Be Your Very First StepThere are so many details involved in the mortgage process that you may not be aware of what pre-approval is if you’ve just entered the market. However, pre-approval assesses your ability to make monthly mortgage payments and can be an important first step in the home-buying process. If you’re currently contemplating a home purchase, here’s why you may want to consider pre-approval first.

Improved Agent Attention

It may be a lesser-known fact, but it’s often the case that many real estate agents will not spend the time or put significant effort into a homebuyer that has not been pre-approved for a mortgage. While a good real estate agent will assist you in finding a home that’s right for you, if you haven’t gone through the necessary process of determining if you’ll be approved, they may think it’s not worth their time to show you houses you may not be eligible to buy.

A Benefit For Home Sellers

In the event that you happen to come across a home that you want to purchase and make an offer prior to pre-approval, there’s a chance the buyer will not waste their time considering it. Because the pre-approval process can determine errors in your credit history and there’s a wait involved, many home sellers will not want to be held up by this process to sell their home. As a pre-approval can reveal errors and bump up your credit score, it can also be of greater benefit for you to have an accurate number going into the home purchase.

Determines Your Financial Health

While a pre-approval is not a sure sign that your mortgage application will be approved, it can provide a detailed look at your financial health. This means that if you happen to have a less flattering credit history than expected, you can go back to the drawing board, saving more money and making payments, to try and bump up your credit. While this isn’t necessarily enticing for the person who is ready to buy, it can be a benefit for the type of home you’ll be approved for.

It’s common to want to get out into the market and find the perfect house at the right price, but pre-approval is an important process that will help you determine the house you can afford. If you’re currently on the market for a new home, contact your trusted mortgage professionals for more information.

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4 Things You Absolutely Should Not Do After You Apply for a Mortgage

4 Things You Absolutely Should Not Do After You Apply for a MortgageIf you have a good credit history and are prepared to invest in a home, you may be feeling pretty confident about the mortgage process. However, it’s important to be aware that there are things that can have a negative impact on your application. Whether you’ve just submitted your documents or are getting close to it, here are some things you may want to avoid.

Acquiring New Credit

It may seem silly that something as minor as a new credit card can be a mark against your credit, but applying for new ones can be a bad sign to lenders. The problem is that this can be signal an unmanageable debt load, so you may be considered a high risk for not being able to make your payments.

Forget To Pay Your Bills

It’s easy enough to get lulled into the feeling that your mortgage application will be approved, but this doesn’t mean that you should forget your financial responsibilities. If you’ve had poor credit in the past and neglected paying your bills on time, now is not the time to do this. Instead, ensure that you’re paying all bills and any applicable minimum payments in advance of the due date so your credit score is not impacted.

Close Old Credit Cards

Many people think that closing out old credit cards can be a positive financial step forward and a good way to streamline their finances, but this can cause damage to your credit score. Because closing a credit card will change your available balance and bump up your debt load, it may mean that your debt percentage will increase. Instead of risking this, leave them active until you’ve received approval.

Quit Your Job

Few people will have the ability to quit their job when they’re applying for a mortgage, but doing this or incurring other fluctuations in your monthly income can cause problems with your application. If you are self-employed, there may be peaks and valleys in your finances, but a huge shift in what you bring home can show lenders that you’re not a solid bet.

There can be a lot of stress that comes along with the mortgage application process, but by paying your bills on time and staying on top of your payments, you can avoid negatively impacting your approval. If you’re currently on the market for a mortgage, contact one of our mortgage professionals for more information.

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Understanding the HARP Program and How to Qualify for a HARP Mortgage

Understanding the HARP Program and How to Qualify for a HARP MortgageInterest rates may be relatively low, but if you’re a homeowner who is struggling with your monthly mortgage payment, it may be time to consider what re-financing options are available on the market. If you are looking for a lower interest rate to improve your financial health, here’s what you need to know about the HARP program so you can take advantage of a better rate.

What Is HARP?

The Home Affordable Refinance Program, which is commonly known as HARP, was created in the wake of the 2008 recession, which was brought on by the high amount of housing debt in the United States. As the program was created to simplify re-financing for those who needed a different mortgage option, it is a means of providing lower interest rates to those who possess a solid payment history but may be struggling with the financial burden of their monthly payments.

What’s Required For HARP Refinancing?

There are a variety of requirements the homeowner must meet so they can take advantage of the HARP program. In order to apply, the homeowner must have a mortgage that is owned by Freddie Mac or Fannie Mae and was purchased prior to May 21st, 2009. If this condition is met, the homeowner must prove their financial reliability by being up-to-date on their mortgage payments with no payment more than 30 days late in the previous six months. While you’ll want to check with HARP’s website or your mortgage adviser for details, eligible property types include a primary residence, a one-unit second home and a one-to-four-unit rental property.

What’s The Fine Print?

Utilizing the HARP program and acquiring a lower interest rate may seem like an instant benefit for your finances, but it’s important to find a lender who does not have high closing costs. If you have a lender at a high cost, it’s possible that even at the lowered interest rates offered by using HARP, the savings gain will not balance out with what you will be paying by sealing the deal.

If you’re a homeowner who is looking to refinance in 2017, HARP may be the ideal mortgage option for you to re-finance your mortgage and save money on a monthly basis. While it’s important to be aware of all of the details involved before choosing this option, if you’re considering HARP, reach out to one of our mortgage professionals for more information.

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Self-Employed? Here’s What You’ll Need to Get a Mortgage Approval

Self-Employed? Here's What You'll Need to Get a Mortgage ApprovalThere’s a lot of flexibility and personal freedom associated with self-employment that can be a great benefit to your lifestyle and your pocketbook. However, because of the somewhat unpredictable nature of self-employment, it can make acquiring a mortgage a little more difficult. If you’ve recently become self-employed or have been in the game for a while, here are some things you may want to consider before submitting your mortgage application.

Putting More Money Down

20% is often considered the magic number when it comes to the down payment because this will allow you to avoid homeowner’s insurance. However, if you’re self-employed, you may want to consider putting even more money down as this will be an even stronger signifier to lenders that you’re prepared for homeownership and in control of your finances. While your down payment will provide you with equity instantly, a higher payment will also lower your monthly cost and make your finances even more secure from month to month.

Minimizing Your Debt

The amount of debt a potential homeowner has can adversely affect any mortgage application, but in the event you’re self-employed, a high debt load means even more money is being paid out of a salary that is not necessarily predictable. By paying off the debts you can before applying for your mortgage, you’ll be able to invest that much more of your hard-earned money into your monthly payment without breaking the bank and cutting monthly expenditures.

A History Of Self-Employment

Being self-employed means you’ll have more to prove to your lender, but if you have a spotty self-employment history and long periods without bringing in any income, this will make it even harder. Instead of jumping into the mortgage market soon after becoming self-employed, try and have at least two years of successful self-employment behind you. By being able to prove this, the lender will see that you’re a solid financial bet and an experienced professional who will be able to find work when it’s required.

The nature of being self-employed and the fluctuations in income that can come along with it can make a mortgage lender nervous. However, by having a solid history of self-employment behind you and minimizing your debt load, you’ll be able to prove to the lender that you’re serious about home ownership. If you’re currently perusing the market for a home, contact one of our mortgage professionals for more information.

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Did You Know?: 4 Factors That Can Delay Your Mortgage Approval (and How to Avoid Them!)

Did You Know?: 4 Factors That Can Delay Your Mortgage Approval (and How to Avoid Them!)If you’re currently buying a home and are stressing about the kind of home to choose and which lender to go with, it can help to clear up some of the confusion surrounding the mortgage process. While mortgage applications are assessed on a case-by-case basis, here are some factors you’ll want to avoid so the timeline of your approval isn’t negatively impacted.

Your Employment Status

It goes without saying that the amount you bring in each month is a huge factor towards how much house you can afford, so having a part-time job, being self employed or even being unemployed can adversely impact your application. Instead of leaving this factor up to chance, make sure you have a job that will more than cover your monthly payment or at least the savings in the bank to take the pressure off.

The Debt You Carry

The amount of your debt has an impact on the house you can afford, but debts whether from auto loans or credit cards; can still adversely impact the lender’s perception of your finances. Before buying a home, you may want to pay down some of your debt or hash out a monthly budget so you’ll have more certainty when it comes to application time.

Your Credit Report

There are few things that will have a more marked impact on your mortgage approval than your credit history, so whether or not you have good credit will play into your application approval. While many people shy away from their credit report, ensure you look it over before submitting your application so you know what you’re dealing with and can correct any mistakes.

The Down Payment Amount

You’ve probably heard that 20 is the magic percentage to put down, and while this number isn’t needed to buy a home, it can be the right number if you have high debt or a negative credit history. While you may want to buy right away, waiting and saving up may actually improve your odds of approval and save you money in the long run.

There are many factors involved in the mortgage process and many of these things have the ability to slow down your application. But, by being aware of your credit and having a 20 percent down payment saved up, you may be able to speed up the process. If you’re close to submitting your mortgage application, contact your trusted mortgage professionals for more information.

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