Financing Guide in North Palm Beach, FL
Applying for a mortgage can be a daunting task, but I’m here to break it down for you and to help make your home buying experience as painless as possible. Each lender and underwriter has their own process for approving buyers, but many of their questions and concerns are universal.
The lender will want to know your household’s annual income, as well as its breakdown. If a significant portion of your income is from bonuses, overtime, or commissions, the lender will want to know how stable this extra income will be in the future. They will consider the ratio of your income to your future home expenses, particularly your mortgage payment, property taxes, and home insurance.
A good rule of thumb is that these three payments should make up no more than 28% of your gross monthly income. It’s a good idea to bring proof of all sources of income to the meeting with your mortgage lender. Other relevant documents are proof of all assets, including balances for bank and retirement accounts, values of life insurance policies, and values of significant property – i.e. automobiles.
Comprehensive Financing Guide
Lenders will also consider other debts you might have, such as outstanding student loans, credit card debt, or an automobile loan. It is important to bring documentation of all debts to your meeting so that the lender can get an accurate picture of your financial situation. The rule of thumb for debt is a debt to income ratio of no more than 36%, but it may or may not be influenced by other factors. These factors, along with your credit score, have a huge influence on the amount and interest rate of the loan for which you will be approved.
You can take steps to make yourself more appealing to lenders. Paying off debt – especially unsecured debt, such as credit cards – will both raise your credit score and lower your debt to income ratio, making you more appealing to lenders. Ensuring that you are as financially stable as possible before applying for a home loan can make a world of difference.
Financing Guide – Drew Saporito, Native Realtor
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