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Financing Basics for Buyers

What you need to know when looking for a mortgage loan

There is no need to stress out when shopping for a mortgage. Below I will review the basics of what you need to keep in mind while shopping for a new home and mortgage. This will alleviate the stress factor and allow you to have a pleasant experience with the largest purchase you will probably ever make. Do you know where you stand in these 4 areas?

CASH
CREDIT
INCOME / EMPLOYMENT
PROPERTY

CASH

The cash amount you have to come in with should include your down payment plus closing costs. Closing costs usually range 2.5% - 3.5% of your purchase price. You can ask the seller to pay for a portion of these. This will determine what Loan-to-Value you will ask the lender for. The more money you have to put down, the more loan choices you have to choose from.

CREDIT

Lenders will pull all 3 major credit bureaus and use the middle score of the three to determine your credit worthiness. The higher your credit score, the better your interest rate costs for the loan will be. You will need a 620 or greater to qualify for a conventional loan.

INCOME / EMPLOYMENT

Lenders will look at the past 2 years of your employment history. You will need to be in the same line of work for the past 2 years in order to qualify for the best loans in the marketplace. They will also average your income for the past 2 years. So keep that in mind when taking raisers and bonuses into account.

PROPERTY

Lenders give owner occupied Single Family Homes the best and lowest interest rates. If you are looking at a Condo or 2 units or greater you can expect to pay a bit more. Also Investment Properties will cost you a bit more.

Whatever your situation, I can work with you to find a loan which can help you achieve your goals.

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