If you are considering buying a home for the first time, you need to do some prep work before you begin home shopping. You would not want to get your heart set on a home, only to learn that it is beyond the scope of what a mortgage firm will loan you. Also, you should be aware that with the current housing situation and mortgage crisis, lenders are becoming much more stringent in their qualifications than they have been in the past few years.
A good starting point is to meet with a banker at the bank you regularly do business with. Your banker or financial advisor can help you get an estimation of your buying power. You should probably also shop around on a website like Bankrate.com. Once the time comes to estimate what you can afford, be aware that any lender will take the following elements into consideration:
A good starting point is to meet with a banker at the bank you regularly do business with. Your banker or financial advisor can help you get an estimation of your buying power. You should probably also shop around on a website like Bankrate.com. Once the time comes to estimate what you can afford, be aware that any lender will take the following elements into consideration:
- Your gross income
- The amount of money you have available for a downpayment
- The amount of your debt
- Your credit score and history
- The type of mortgage you choose
- The current interest ratesYou can learn more about the financing piece of the real estate transaction if you join us at our upcoming Homebuyers Seminar (see post below). Happy house hunting!
2 comments:
You say that lenders have been tightening up on their requirements, which makes sense given market conditions. But here's my question for you: From what you've seen, are buyers *also* tightening up in terms of what they're willing to spend, what fraction of their income they're willing to spend on housing costs, etc.?
Thanks for the question! My experience has been mixed. Some prospective buyers still don't think we have hit bottom, and are staying on the sidelines. Others have scaled back a bit, and buy less than what they could afford. We have had incredibly good market activity in the past 45 days, and there is 20% less inventory on the market than there was a year ago. Those on the sidelines may miss the boat.
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