Making Yourself Appealing to Home Loans Lenders

Current market conditions make this a great time to buy a house, so if you are considering jumping in to take advantage of all the inventory available and record low interest rates, take a few minutes to learn what it takes to make yourself appealing to home loan lenders.

Of course the point to making yourself appealing to a mortgage lender is to qualify for the best interest rates that they offer, which in turncan saveyou thousands of dollars over the life of your mortgage loan.

Income and Debt

In order to figure out how much you can afford, you and your lender will need to perform a calculation called a debt to income ratio.

• You add up your monthly payments for your current debts. Include items such as car payments, student loans, credit cards, alimony, and child support.
• Include the expected cost of your new house payment with insurance and taxes.
• For an FHA mortgage our total debt should beless than 43% of your gross monthly income.
• For a conventional mortgage loan your debt to income ratio cannot exceed 45%.

Employment

The most attractive borrowers are the ones who can show at least two years of steady employment, preferably with the same company for at least that length of time.

Credit Score

To get the very best interest rates, borrowers should have a 720 credit score, but you can qualify for a mortgage loan with a lower score. Shop around, because this varies by lender.

Down Payment

Your potential lender will be looking for a borrower who has funds (which can be verified) in their own name to cover the costs of a down payment, closing costs and additional funds in reserve.

• FHA backed mortgage loans require a minimum of 3.5% of the purchase price as a down payment.
• Depending on your lender, and the state you live in, you can expect closing costs to be in the range of 3% to 5% of the purchase price.

Get Legal Help

For most Americans, purchasing a home is the largest investment they will ever make so it makes sense to prepare yourself to make that investment. Start shopping for a real estate attorney to help you conclude your transaction right around the time you start shopping for a loan. Your attorney can be invaluable especially if you purchase a foreclosed property, or a property that is being sold without a real estate agent. A good real estate attorney is a great investment when you are buying a home.