Buying a home may be the single biggest investment you will make. When talk turns to home buying and mortgages, the three most important questions for your lender always come to mind.
1. Can I qualify?
Debt-to-income ratio are very important in determining if and the amount of loan you can qualify. If the loan program uses a ratio of 38/42, it means you are allowed to use 38% of your gross income on a monthly mortgage payment and no more than 42% on total debt (such as car and school loans, credit cards, child support and alimony). For example, if you earn $72,000/year your monthly gross income would be $6,000. Under the 38/42 ratio, your maximum monthly mortgage payment should not be over $2,280 while the total monthly debt should not exceed $2,520. These numbers are for example only, but you get the picture.
2. How much home can I afford?
Down payments are based on a percentage of the selling price of the home. Many mortgage programs are available, including loans that require a minimum down payment.
3. How’s My Credit?
Credit Reports are required by all lenders. These contain personal financial data on you, including bank, credit card accounts, and past loan payment information. It is important that you know what is in your personal credit report, you would be amazed at how many people are suprised of what they find. To obtain a free credit report, go to www.freescoreonline.com or contact your mortgage lender when you begin the qualification process.
Want to know today’s rates? Wells Fargo has up to date mortgage rates on line.