Purchase

Often times you can qualify for more than you can afford. Banks allow varying debt to income (DTI) ratios, which determine the amount of debt to your income. However, these DTI’s do not factor certain personal expenses like private school, gym memberships, entertainment expenses and retirement goals. I recommend this nifty calculator to determine the amount of a mortgage you should apply for based on your personal goals.

Various loan programs exist for customer with with different credit scores. Generally speaking a credit score over 720 guarantees the best possible rates and terms for a mortgage. However, some banks offer mortgages for customers with credit scores as low as 520 albeit with much higher interest rates?

This will depend on several variables. The most important one is, do you qualify for both the home you are buying and your current home without any additional rental income. If you currently own a rental property (evidenced on your recent filed tax returns) you can use the rental income to help qualify, with certain requirements. This also applies to buying a second home where you will be receiving fluctuating rental income.

Guidelines for customers with a previous short sale and/or foreclosure change periodically. Currently an FHA mortgage is available after three years from a foreclosure or short sale. Conventional mortgages require seven years from a foreclosure date and as little as two years from a short sale (with special circumstances). Click here for an email update if guidelines change.

The best downpayment for a home is typically 100%. However, short of being able to pay cash for a home a 20% down payment will allow you to benefit from terrific rates and terms without mortgage insurance. A 3.5% down payment will allow you to apply for an FHA loan with mortgage insurance. Some loans exists without mortgage a 20% down payment and the mortgage insurance is built into your interest rate.

Mortgage insurance in an insurance that protects the bank in case you lose your home to a foreclosure. Mortgage insurance does not provide you any type of insurance if you lose your home, it is only for the banks benefit.

Tax laws change constantly and are subject to certain restrictions. Check with your accountant as it pertains to your specific situation.

Historically banks provided first time home buyer programs to help encourage home ownership. Currently banks do not offer first time home buyer incentives or programs, however there are certain requirements for qualifying as a first time home buyer that are different that a seasoned home buyer. I recommend you contact me today to get pre-approved to purchase a home.

Always talk with your accountant about current tax laws that exist for paying points and fees when buying a home. However, my recommendation is to look at the costs associated with paying points and fees compared to your anticipated retention period of owning your home. Cash flow is another consideration, both the upfront costs of receiving a lower rate and the monthly mortgage payment.

Buying a home is not the best option for everyone, even if you can afford to pay for a mortgage.