Every day people call me and want to see a house or houses they have seen that they like. I start with asking what they are looking for, 3 bedrooms, 2 baths is the most common answer and then I try to determine where they would like to live and any special features desired.
The next big question is how much do you plan to pay? To this a variety of answers are given. And then I ask the million dollar question, “Have you been prequalified or preapproved by a lender?”
Many say no. The problem with that is that they probably also don’t know what their credit score is or how much they can really afford. If you have a steady job and have been in it for at least two years, your credit score and amount of expendable income are the two key indicators for a lender.
According to lenders, you should make all your monthly payments including your house and all other debt obligations using no more than 28% to 44% of your monthly income. If the mortgage amount you're applying for, plus your monthly payments on credit card, car and student loan debts consumes more than 44% of your monthly income, you may not be able to qualify for a home loan.
Your credit score is the next big indicator. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 580 and 660, depending on the lender. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible. Now if you have been able to say yes I meet these guidelines, or if you don’t know if you meet these guidelines, then it’s time to visit a lender. The good news is that there are still 100% financing loans available and a FHA loan can be obtained with a 600 FICO score and 3.5% down.
When you visit the lender, it's best to do more than prequalify for a loan: You should ask for a preapproval for a specific loan amount. This means the lender has already indicated a willingness to approve your loan based on having checked your credit and evaluated your financial situation, rather than simply relied on your own statements. Preapproval isn't an all-out guarantee that the lender will actually fund the loan, but it's close. The lender will make actual loan approval conditional on an appraisal of the property, a title report, and other conditions.
Call me or your favorite Realtor who can walk you through all the steps to home ownership.
Karen Stone, REALTOR®
Residential & Commercial Sales
Century 21 Service Realty
karen@c21service.com
http://paducahhomepage.blogspot.com/
C:
270 366-4614
O:
270 442-2100
