Simplified "To Do" List for Buyers to get your financing in order before buying your next home or investment property! These tips may help you save you time & make your transition to your new home a smooth experience & enjoyable!
1. DEVELOP A HOUSEHOLD BUDGET: Instead of creating a budget of what you'd LIKE to spend, use receipts to create a budget that reflects your ACTUAL spending habits over last several months. This approach will factor in unexpected expenses such as car repairs, as well as predictable costs such as rent, utility bills & groceries.
2. REDUCE YOUR DEBT: Lenders generally look for total debt load of no more than 41% of your income. This figure includes your mortgage - which typically ranges between 25-29% of your net household income. Which may mean... you may need to get the rest of your installment debt (auto loans, student loans, credit cards, etc) down to between 8-10% of your net monthly income to qualify.
3. LOOK FOR WAYS TO SAVE: You probably know how much you spend on rent & utilities, but minor expenses can add up, too. Try tracking all your expenses for a month. You will likely spot some great ways to save, weather it's nixing that morning coffee run, eating dinner at home more often, etc.
4. SAVE FOR A DOWN PAYMENT: Designate a certain amount of money each month to a savings account. Although it's possible to obtain a mortgage loan with just 5% down or Less, you can usually secure a better interest rate by putting down a larger percentage of the total purchase. Aim for 20% down to avoid Private Mortgage Insurance with majority of lenders. (Some subsidized lenders only require 15% down to avoid PMI.)
5. KEEP YOUR JOB: While you don't need to be in the same job forever to qualify for a home loan, having a job for less than 2 years may mean a higher interest rate. If you do switch jobs, staying in the same "field" may qualify. For example if you are a nurse & switch hospitals or a teacher & switching schools, it would likely not be weighted as heavily versus someone who goes from being say a construction worker to a mechanic.
6. ESTABLISH GOOD CREDIT HISTORY: Get a credit card & make payments on or Before the due date & pay off the Entire balance to avoid paying interest. Do the same for ALL your other bills!
7. When you are ready to apply for a home loan & are interviewing Lenders, here are some great comprehensive questions to ask:
What are your most popular mortgage loans you make & why?
Which type of mortgage loan do you think would be best for me/us & why?
Are your rates, terms, fees, & closing costs negotiable?
Will I have to purchase private mortgage insurance? If so, how much will it cost & how long will it be required? Note: PMI is usually required if you have less than 20% down payment, but most lenders will discontinue the policy once you have acquired a certain amount of equity by paying down the loan.
Who will service the loan? Your bank or another company?
What escrow requirements does your bank have?
How long is your loan Lock-In period? Will I be able to obtain a lower rate, should the interest rates drop during this period. Note: Some lenders will grant you a one-time drop (should interest rates drop during this lock period).
How long will loan approval process take? How long will it take to close the loan?
At Lunzmann Realty, we are happy to help you along the way of your home search! Give us a call or find us on Facebook if you're interested in buying or selling, we would love the opportunity to earn your business. Lunzmann Realty - Simplified. Satisified. Sold. Call us at: (402) 274-1211. Visit our website: www.LunzmannRealty.com