5 Key Items for a Quick Mortgage Approval

Want a Quick Mortgage Approval? Come Prepared With These 5 Key ItemsAre you finally getting into the real estate market? There are a few key items you’ll need to prove your reliability to a mortgage lender.

Previous Tax Returns

To ensure the earnings information you’ve provided to the lender, you’ll need tax returns for the two years prior to your mortgage application. In addition, you may also be required to provide your W-2s as backup documentation.

Bank Statements

For your down payment, you’ll need to present bank statements to show you have a cushion in case interest rates increase. If you do get money gifted to you for your down payment, you’ll need a letter to prove you’re not indebted to the provider.

Recent Pay-stubs

It can be much more difficult to get approved for a mortgage if you have a patchy work history or happen to be self-employed. You’ll need 2 months of recent pay stubs to prove consistent employment. The pay-stubs provided should also be an accurate reflection of the salary you’ve provided on your application to ensure no discrepancies.

Investment Statements

It’s certainly a good sign to the lender if you have a healthy balance in your checking and savings accounts. But you’ll also need to provide any statements for mutual funds and other investments. While they may not be necessary to prove financial soundness, they will help with approval if you have a lot of money squirreled away.

A Listing Of Debts

A lender will also want to know about any outstanding debts like auto loans, credit card payments or student loans. This will give the lender a good sense of your honesty and your ability to manage your mortgage.

Mortgage approval may seem like a time-consuming process with no certain end. By having the appropriate documentation and being upfront about your debts, you may be able to speed up the timeframe. If you’re currently perusing your mortgage options, contact us for the inside scoop.

How to Determine Your Home Loan Eligibility

home loan eligibility

Are you looking to take that next step in your life? Have you finished browsing the net looking for that perfect place to call home?

Are you ready to become a homeowner?

Before you can actively start looking to purchase a property, the first sensible thing to do would be to check out your home loan eligibility.

Why?

Because knowing how much you can borrow not only helps you understand your own financial situation but also it stops you from getting your heart set on a place, only to find it out of your budget.

Let’s take a look at the best ways to check on your maximum home loan potential.

Calculate your Home Loan Eligibility Early To Set Your Search In the Right Area

When it comes to a home loan, the math is actually quite simple. You look at what you have coming in – your income – and you deduct your outgoings each month – your expenditure. The rest is just a matter of seeing how much you can realistically afford to pay back each month.

There are plenty of home loan calculators out there that can help you get a ballpark figure.

The main criteria that get looked at when applying for a home loan are:

Age – As harsh as it sounds, age plays a role in your home loan calculations.

Employment Status – if you are in a stable full-time job, then that is a big check in the plus column because a regular income shows the bank that you are in good standing to make your payments every month. The amount you are earning will also directly influence the amount you can borrow.

Credit Rating / Credit Card History –  If you have been living a debt free life, or at least maintaining your credit card by paying off your purchases in a simple large lump sum each month, then you score maximum points. The better managed your credit card history, the better image you produce for the banks looking to lend you money.

Choosing the Right Home Loan for You

There is more to finding a home loan than just understanding your home loan eligibility. Loan types and duration are also deciding factors.

The core loan types you should be looking at:

Fixed Interest –  The simplest loan. All you need to do is set your interest rate for 15-30 years and simply let your payments run. A great loan for those that are buying with the intention of staying put, and want to know exactly how much they will be paying for the foreseeable future.

Adjustable Rate Mortgages – If your credit rating is working against you, then you can counter balance this to some degree by taking a flexible interest rate loan. Here, the rate is set for a shorter period of time and will then be adjusted.

Federal Housing Administration Loan – For many people, being able to save the average 20% needed for a downpayment on a home, can be tough. With FHA home loans, you can put down as little as 3.5% on a down payment and move on with a fixed interest rate.

The only caveat with this is that you need to take out mortgage insurance, which you can spread over the life of the loan. This totals to approximately 1% of the full loan value.

Buying a Home is the Biggest Decision You Will Make

Making the decision to buy a home is one of the biggest things you will do in your life. To do so without due care and attention can be problematic.

By first understanding your home loan eligibility you can get yourself started on the next phase of your life with a clean conscience, knowing that you are not getting yourself into financial trouble.

If you need help with arranging your home loan or are looking for a quote, get in touch with us today. We are here to help.

3 Helpful Benefits For First Time Home Buyers

benefits for first time home buyersDid you know a number of benefits for first time home buyers exist today?

Buying your first home is an exciting, important, and sometimes stressful process. For first time home buyers, special benefits sweeten the deal and encourage sales.

The term first-time buyer refers to individuals who’ve not purchased a home in 3 years. Most first-time buyers range from 18-34 years old, however bounce-back come in all ages.

Whichever category you fit into, you might not know about the benefits available to you. In this article, we’ll go over some of the benefits for first time home buyers.

Mortgage Interest Deductions

Tax rates favor homeowners. In fact, home ownership is often thought of as a shelter from taxes.

For many, the mortgage tax deduction benefit overshadows the intangible benefits, like pride in owning a home.

How can you qualify? Your mortgage balance must not exceed the cost of your new home. Mortgage interest proves deductible on your tax returns. This is a great benefit because interest is the largest part of a mortgage payment.

Property Tax Deductions

Property taxes for your first home are deductible for income tax purposes as dictated by the Internal Revenue Service. Vacation homes can also benefit from this tax deduction.

Capital Assets

Most people consider their first home a starter home. When you decide to move, you’ll benefit from gaining capital assets.

How does this work?

If the profit you make on your home is more than what is allotted for any tax exclusion, the profit is considered a capital asset. These profits receive special tax treatment.

Even if you profit from the sale of your home, the taxable portion of that profit remains small.

Use Your Mortgage To Build Equity

Each month that you pay your mortgage, you not only pay interest, you also pay the principal balance of the loan. The more of this you pay off, the more equity in your home you secure. This means more ownership for you.

Your Home Appreciates

The real estate market is volatile. It occurs in cycles.

Across the board, homeowners see their investment as a safeguard against inflation of the market.

First Time Homebuyer Loans

First time homebuyer loans come with low down payments, reduced interest, and limited fees. They’re offered to first time home buyers through the Federal Housing Administration.

This type of loan acts as a benefit for first time home buyers because of its minimal restrictions. Consider a first time home buyer loan a large down payment is out of reach, you cannot meet high-interest payments and fees, or your credit score is low.

All of these factors make these loans too good to miss out on for many buyers.

Benefits For First Time Home Buyers in 2017

As you can see, many tangible benefits for first time home buyers exist today. From tax deductions to an easier loan process, buying a home offers more than pride in ownership.

Starting your first home search? Contact us today to learn more about mortgage loans that work for you!

What You Need To Know About Getting Your Next Mortgage

Yes, It's Getting Easier to Get a Mortgage. Here's How You Can Take AdvantageIt can be hard to stay on top of the changing real estate market from day-to-day. As a matter of fact, there are more available mortgage products out there than ever before for many kinds of homebuyers. If you’re wondering how you can take advantage of easier lending opportunities and strike while the iron is hot, here are some things to consider.

Take Care Of Your Credit

While many regulations on mortgage applications may have been loosened in recent years, having a better credit score will still enable you to qualify for a mortgage much easier. Instead of risking it, ensure that you’ve obtained a copy of your credit score and are aware of where you stand as a financial risk. By working on your credit and correcting any errors on the report, it will be that much more likely to have your mortgage application approved.

Saving For A Down Payment

It’s often said that 20% is the ideal amount to put down in order to avoid private mortgage insurance, but it’s not the required amount in order to invest in a home. While it may save money in the long run to put more money down, there are many opportunities for putting a lot less down and still being able to purchase. You may want to hold off until you can save up for your down payment, but possibilities do exist for mortgages with as little as 3.5% down.

Dealing With Closing Costs

Saving up for a down payment and deciding to invest in a monthly mortgage payment is a significant commitment. Adding mortgage closing costs to that can be a bridge too far for many potential homebuyers. Fortunately, many lenders are offering the opportunity for closing costs like origination and attorney fees to be included in the total cost of the loan. While this will bump up the amount of your monthly payment, it can make a mortgage more feasible from the start.

For many people, there’s a lot of stress that goes along with applying for a mortgage, but with lower down payments required and closing costs included in the total price, getting approved has become a lot easier. If you’re currently in the market for a new home, contact us for more information.

Til’ Debt Do Us Part: How to Get a Mortgage If One Spouse Has Poor Credit

Til' Debt Do Us Part: How to Get a Mortgage If One Spouse Has A Terrible Credit ScoreA poor credit history is a reality for many people, but it can be particularly daunting when it comes to investing in a house. Simply because you or yours have experienced bad credit doesn’t mean that you should be penalized in the future. If your spouse has struggled with bad credit in the past but you’re both preparing to move forward and invest in a home, here are some tips for getting it together financially.

Face The Music

Many people who have bad credit are too scared to look at their credit report and broach it honestly. But it’s important to come to terms with the problem so that it can be fixed. Instead of ignoring it, get a copy of the credit report and review it for any errors so that you can update these if needed. It’s a good thing to be aware of the issues impacting your credit score. While there may not be any inaccuracies on the report, knowing what you’re dealing with will give you a place to start.

Make Your Payments

At some point, most people have missed a credit card payment, but the first step involved in improving your finances and your credit is ensuring you pay your bills on time. While this won’t require paying the complete balance each month, it’s important to pay the minimum balance before the due date, and stick with it! It may seem like a small step, but in time it will improve credit and say a lot to mortgage lenders!

Save Up For Down Payment

20% is the amount that’s often suggested when it comes to a down payment, but if your spouse has terrible credit, it may be worth your while to save up more. Having good credit for both you and your spouse is important in getting approved for a mortgage, but by having extra for your down payment and paying your bills on time, you may be successful at convincing lenders you’re a solid bet.

It can be a lot more difficult to get your mortgage approved if your spouse has bad credit, but there are steps you can take to improve your financial outlook and give lenders a better impression. If you’re planning on investing in a home soon, contact us for more information.

Your Debt-To-Income Ratio and How It Affects Your Mortgage

Your Debt-To-Income Ratio and How It Affects Your MortgageWhen you’re delving into the market in the hopes of finding your dream home, it’s likely you’ll come across the term debt-to-income ratio. While it might not seem important at first, but your DTI is the key to determining the amount of money you can put into your home and how much you should spend on a monthly basis. If you’re curious about what this means for you, here’s how to calculate DTI and how it can impact your mortgage.

What’s Your DTI Ratio?

One of the best ways to determine whether or not a home is affordable for you is to first calculate your DTI ratio. To get this amount, add up all of your monthly payments including any credit card, loan and mortgage payments Then divide this amount by your gross monthly income. The amount you get is your DTI percentage. This will help to determine how much your monthly payment should be.

What Does Your DTI Mean?

Your DTI percentage helps to determine the amount of house you can afford on a monthly basis. While a DTI of 25% or less is ideal, a DTI above 43% may make it harder to get financing since there will be little room for error. When it comes to a higher debt load, approval may come down to what your credit history says about your financial health.

The Amount Of Home You Can Afford

It’s easy to be convinced that your dream home is for you and worth the splurge. But investing in too much home can lead to future financial difficulties. If you’re set on a home that has a high monthly payment, you may want to hold off until you’ve saved a larger down payment. You can also revamp your budget so that you can make the investment work for you. It may also be worth continuing the housing search so that you have more flexibility to invest in education, travel or other things down the road.

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Three Major Mortgage Mistakes To Avoid When Buying a Home

Buying a New Home? Three Major Mortgage Missteps That You'll Want to AvoidBuying a home is one of the biggest financial investments you’ll make in your life. It’s important to make sure that you’re doing what will be right for you down the road. If you’re trying to avoid buyer’s remorse and are wondering what major missteps to avoid when diving into the market, here are a few things you may want to watch out for.

Buying Too Much Home

It’s often the case that a homebuyer will get so excited about a home they see that they need to have it. But putting all of your money into one investment can be difficult to sustain over time. Instead of deciding to budget and buckle down on your expenditures, ensure that your monthly budget still leaves room in the event of other expenses or financial setbacks. This will ensure that your home stays as something you can enjoy that won’t become a burden.

Not Saving Up Enough

Many people want to invest in the market right away and get into a home, but it can often be worth the wait to save up so that you have at least 20% for a down payment. Putting 20% down on a house means that you won’t have to pay the added costs for Private Mortgage Insurance (PMI). Not only can this lead to smaller mortgage payments on a monthly basis, it also means that you’ll be able to pay off your mortgage loan that much more quickly.

Forgetting All The Associated Costs

It’s easy to be wooed by the cost of the monthly payment and think that it’s less expensive than you thought. But it’s important not to forget about all the other costs that go into owning a home. In addition to the closing costs of home ownership, there will also be property taxes, homeowner’s insurance and the maintenance fees required for home upkeep. If the monthly mortgage payment is already pushing it, costs like these can make your overall mortgage costs unmanageable.

There are many mistakes that can be made when it comes to purchasing a home. But by being aware of all of the costs of home ownership and taking the time to save up, you’ll be well on your way to owning a home that’s affordable and sustainable. If you’re getting prepared to delve into the real estate market, contact your trusted mortgage professionals for more information.

How to ‘Stress Test’ Your Finances For Peace of Mind

Worried About Future Mortgage Rate Increases? Here's How to 'Stress Test' Your Finances When it comes to real estate, there are always going to be upswings in the market that will have an impact on your mortgage payment and overall financial health. However, with a fluctuating market here to stay, you may be wondering how you can guard your biggest investment and your finances against rate increases. If you’re concerned about rates on the rise, here are a few tips to test out you’re fiscal well-being.

Calculate Your Debt-To-Income Ratio

It’s beneficial to determine your DTI ratio prior to purchasing a home. But since debt and housing costs are always fluctuating, calculating this number again can be a wakeup call. By adding up your monthly expenditures (including any debt), and dividing that number by your pre-tax income, you’ll be able to determine your DTI percentage. While it’s ideal to have a percentage of less than 28%, if your expenditures have risen above this number, it may be time to take a look at your monthly budget and see what you can cut out.

Do You Have Emergency Savings?

Many people make a habit of putting money into their retirement funds each paycheck, but it’s equally important to have emergency savings you can access in the event of car repairs, home maintenance issues or an unforeseen medical problem. While it’s often suggested that a person should have a minimum of 3 months of expenses at their disposal, saving more than this can make you better prepared in the event that a rate increase requires you to dive into other funds.

Review Your Budget

It’s easy enough to have a monthly budget, but the hard part for most people is sticking to it on a day-to-day basis. If you’ve veered off the trail a little bit in this regard, sit down to review your expenditures and determine what your financial outlook would be if you experienced an interest rate bump next month. In the event that there’s very little cushion and no money for savings, it may be worth your time to craft a new budget that gives you a bit more wiggle room.

Many people are uncertain about what the short-term economy will bring for their mortgage rates, but by reviewing your budget and maintaining emergency savings, you can be better prepared for the future.

If you’re currently considering purchasing a home,  contact one of our mortgage professionals for more information.

The 2017 Mortgage Rate Outlook: Here’s What the Experts Are Saying

The 2017 Mortgage Rate Outlook: Here's What the Experts Are SayingThe post-election period is often one of uncertainty. And the time since the 2016 election has been no different with regards to market force and the financial world. With a new administration taking office, there are many questions regarding how Donald Trump’s presidency will impact the market and your mortgage. If you’re wondering what the predictions are for the coming year, here are a few things the experts are considering.

An Increase In Rates

Due to an expected hike in rates by the Federal Reserve, it’s unlikely that potential homebuyers will be able to get the low interest rates of previous years. While higher rates are likely, the proposed tax plan and budget of Donald Trump may lead to increased inflation and could also have an impact on rates down the road. The low rates of previous years certainly made homeownership a more feasible option, but it’s still a good time to get into a home before they rise even more.

Less Red Tape

The money invested into regulations is something that Donald Trump was highly critical of in the run up to the election. This may mean many opportunities for home ownership that did not exist before. While a poor credit history can make or break a mortgage application, in a time of loosening regulations there will likely be more available mortgage products for those who have a less than stellar financial situation.

Privatizing Loan Programs

There is the possibility that government-sponsored home loan organizations like Freddie Mac and Fannie Mae will come under new ownership. While this may provide an opportunity for potential homeowners, because the risk will be taken on by private owners – and not the government – this may lead to higher rates. As Jordan Levin of the California Association of Realtors says, “I can say with a pretty good level of confidence that it will increase the cost of borrowing because there’s going to be more risk from those pools being borne by the private sector and they’re going to want to be compensated for that additional risk that they’re bearing.”

While the economic policy of the coming years has yet to take shape, mortgage rates are on the rise and the regulations surrounding home ownership are likely to loosen. If you’re currently waiting out the 2017 market and are considering your options for home ownership, contact us for more information.

How Will Having a New President Impact Your Mortgage?

How Will Having a New President Impact Your Mortgage? Let's Take a LookThere is always uncertainty in the market in an election year, but many people are wondering exactly what kind of impact Donald Trump’s election will have on their mortgage and the real estate options available. Whether you are still paying off your home or have been shopping around for the right one, here are some possibilities for the real estate market following the results of the 2016 election.

An Increase In Luxury Properties

With the release of President Trump’s tax plan, which provides the most sizable tax cuts to the wealthy, it could be the case that there will be an increase in the demand for high-end properties which may lead to less availability and a higher price point. As this kind of demand could also work to bump up the median price of real estate in urban areas, it could have an adverse impact on low-income earners who may see themselves priced out of a more expensive market.

Rising Mortgage Rates

Most people that have been perusing the market recently have heard about the low interest rates that make purchasing a home a good financial decision. However, following the uncertainty of the election, interest rates are on the rise. While the sense of instability may persist until potential homebuyers know more, this boost in the rates since the election may mean that many buyers will decide to hold off for a few months.

A Loosening Of Regulations

The concept of the cost involved in regulation was something that President Trump brought up many times on the campaign trail, and this could be a sign that he is ready to make adjustments when it comes to housing regulations. While there may be little he can do at the local level, if regulation changes take hold, this could mean more loan opportunities for those with a poor credit history who may not have been a shoe-in for a mortgage previously.

With the fluctuations of the market dependent upon a variety of factors, it’s hard to say what will occur in the mortgage market in the next few months and years. However, with mortgage rates on the rise and the potential change in regulations, it could continue to fluctuate until there is more certainty on the horizon. If you’re currently on the market for a home and are curious about your options, contact one of our mortgage professionals for more information.