mortgage – The Real Estate Beat

Buying a home doesn’t start with the house – it starts with the home loan. I cannot tell you how important it is for Buyers to LOAN SHOP BEFORE they house shop! It is a task only the Buyer can do. Your Realtor cannot apply for home loans for you. It is a LOT OF WORK! Ask anyone who recently brought a home, you will be scanning and rescanning documents till you’re blue in the face. I find many people shy from the responsibility which will only make their journey into homeownership much more difficult. In our Silicon Valley Market – Time is of the Essence. I say this because it is also a term in our legally binding contract – not just a sediment of our breakneck speed.

So when I read this article, I knew I had to share it. So here you go…

What You Need to Know before Shopping for a Mortgage

Buying a home is probably the largest purchase you will ever make. The best ways to ensure that you do not make a mistake that could cost you thousands or tens of thousands of dollars over the term of the loan is to shop around for the best possible mortgage for your circumstances. What should you know before hopping for your loan?

How is your credit?

Whether you get a loan or not is dependent on your personal credit situation. You must have a credit score that will assure you of meeting the lender’s requirements for approval. Also, the rates you are offered for the loan will be a direct result of your credit scores. Therefore, before going mortgage shopping, access your credit reports and scores. Just because your credit is not perfect does not mean you would not qualify for a mortgage. If there are negative entries on your credit reports, make sure that they are accurate. Errors are commonly made and they result in depressed scores. There are laws that govern what and how information is reported on your credit reports. These laws were passed toprotect you. If you do not know how to exercise your consumer rights, there are legitimate Credit Restoration companies who could do this for you (like New You Credit Repair). Look for the NACSO logo on their website to assure yourself that these companies are legitimate.

Want to know more about getting a mortgage or bettering your credit profile and scores, give us a call! 650.568.5522 / Info@TheCatonTeam.com

Comparison Shop

Before choosing a mortgage, do a little comparison shopping and get information from several lenders. You should ask for quotes from commercial banks, mortgage companies, and credit unions and compare the rates you receive for the types of mortgages offered. Most people are surprised to find significant differences in the offers they are given.

Clarify Costs

Make sure you know upfront all of the costs associated with a mortgage. You should ask for specific information concerning:

•Rates

•Points

•Fees

•Down Payments

•Mortgage Insurance

•Closing Costs

The goal is to avoid any surprises concerning hidden fees, so never feel as if you are asking too many questions. The more you know the less risk there is you will end up with a mortgage you cannot afford.

Negotiate

It is possible to negotiate a better offer than what you are initially given. If you like things about one mortgage offer and other things about another mortgage offer, let the lenders know what you have been offered and see if they will work with you to get you the exact mortgage you want.

Communication is key in this process. Speak freely with your lender, your Reatlor and yourself. Ask questions. Do the ‘Homework’. The Caton Team has over 25 years combined Silicon Valley Real Estate Experience. We know what it takes! Curious if you can buy – give us a call or email to set up a complimentary evaluation. 650.568.5522 / Info@TheCatonTeam.com

I read this article at: https://www.linkedin.com/pulse/what-you-need-know-before-shopping-mortgage-stephen-leifer

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I had to share this article – with our Fall Real Estate Market starting now – it’s a good time to think about your budget if you are planning on becoming a home owner! I find so many buyers thinking about the house they want before they consider the impact of home ownership on their day to day finances. Taking time now, before you house shop, to put your financial house in order – will help your chances in this competitive market today! Enjoy – Sabrina

4 Tips to Determine How Much Mortgage You Can Afford

By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.

1. The general rule of mortgage affordability

As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.  To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.

2. Factor in your downpayment

How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home’s cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.

The lower your downpayment, the higher the loan amount you’ll need to qualify for and the higher your monthly mortgage payment.

3. Consider your overall debt

Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn’t total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn’t exceed 41% of your gross annual income.  Here’s how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don’t top 41%, or $3,416 in our example.

4. Use your rent as a mortgage guide

The tax benefits of homeownership generally allow you to afford a mortgage payment—including taxes and insurance—of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.  Here’s an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.   However, if you’re struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.  Also consider whether or not you’ll itemize your deductions. If you take the standard deduction, you can’t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a “what if” tax return, can help you see your tax situation more clearly.

By: G. M. Filisko

I read this article at: http://members.houselogic.com/articles/4-tips-determine-how-much-mortgage-you-can-afford/preview/

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