Posts Tagged ‘downpayment’

A Single Underlying Factor When Applying for a Mortgage

Every mortgage lender develops their own unique guidelines for evaluating the factors contained in a home loan application. These may change from time to time so that their portfolios stay “balanced”—that is, so that the cumulative risk represented by the entire batch of home loans do not exceed the level of risk they wish to assume.

Potential Bedford mortgage applicants are bound to be curious about which factors are more or less influential for that decision. Their curiosity is why you can find hundreds of “Top 5” and “Top 7” lists of “mortgage application factors”—and why home loan originators pay top dollar to advertise on them.

Given that the factors mortgage companies examine are hardly secret, it’s not surprising that all of the lists are pretty similar. It’s also true that the individual factors all have something to do with a single underlying element. (I’d call it the “hidden factor” if it weren’t right out there in the open). Here’s a typical list seen as it relates to that single underlying factor:

  1. Down payment (underlying factor: size of loan). If, say, $50,000 will be available for the down payment, a $200,000 home loan would be easier to grant than one for $600,000. Many mortgage firms have relaxed their requirements—but inevitably look harder as a down payment percentage declines.
  2. Debt level; aka Debt-to-Income ratio (underlying factor: size of loan). Lenders analyze an applicant’s monthly cash flow to determine how much will be available to pay the monthly mortgage payment. The size of the loan—thus amount of the payment—determines if that’s easily doable.
  3. Loan type (underlying factor: size of loan). Conventional loans carry stricter qualifying factors than do other types. For instance, if the size of the loan is beyond the conforming loan limitation, jumbo loan requirements pitch in.
  4. Employment history (underlying factor: size of loan). Starter homes requiring smaller loans are often right-sized for younger borrowers with shorter employment records.
  5. Credit Score. Typical descriptions say things like, “Borrowers who need to finance more will need a higher credit score of 700 or above…” In other words (you guessed it), underlying factor: size of loan.

Success when applying for a mortgage loan does involve all these factors—­and more­­—but that’s just another way recognizing the common sense notion that home loans are granted to those who can demonstrate the ability to repay. The last time that notion was abandoned, the global financial crisis ensued.

The corollary for house hunters is equally clear: determine your comfortable budgetary range first­­­–then go out and find your new home. The mortgage lenders will fall into line—and I’ll be delighted to help!

Joan Parcewski, Realtor & Notary

LAER Realty Partners           http://www.JoanParcewski.LAERRealty.com

JParcewski@LAERRealty.com    cell 978-376-3978

Laer Realty PartnersJoan Parcewski Full Picture 102017

 

Down Payment – Where to find it….

When buying a home many times the biggest hurdle seems to be the downpayment. Many people spend years trying to save for a down payment.  It takes a great deal of financial discipline and planning.  The larger the downpayment the lower the monthly payment.  This information from Trulia is important to those who struggle to put together the funds to finally purchase their dream home.

What programs exist today to help with a downpayment?

1. Local downpayment assistance programs – Some are for first time homebuyers OR for buyers with low or moderate incomes.  Many times potential buyers must…

  • bringing their own funds to the table
  • picking a home that meets certain minimum condition criteria and/or
  • completing a course of homeowner education classes

to qualify for these funds.  Your Realtor may be able to direct you to some of these programs (eg in Massachussets there is Mass Housing assistance https://www.masshousing.com/portal/server.pt?open=514&objID=268&parentname=CommunityPage&parentid=0&mode=2&in_hi_userid=2&cached=true

2. Parents, Family, Friends – Some programs will allow some portion of the downpayment be in the form of “gift money”.  Many times lenders will require that a gift letter be provided stating that the person is a relative and that the money is a gift (not a loan).   There may also be an opportunity thru another program (not requiring the person to be a relative) – FHA Bridal Registry which allows couples to open a registry account with their FHA mortage lender and deposit checks from anyone who wishes to give them monies.   Check with your lender to see if this is an option and, if so, how to open such an account.

3. Your Employer – Some universities, municipal agencies,  and other large and small employers may make down payment and other home buying assistance programs available to their employees.  Check with Human Resources to see what might be available.

4. Personal income.  Set a budget and stick to it.  Find areas in your daily spending that you can cut back on….It’s possible you could save $5k or more just by looking at and watching your daily spending.  Redirect these dollars to your downpayment savings account.  Here is where knowledge is power.  Knowing where you might be wasting money and saving it could mean your dream home is a reality.

5. Your assets – If you have a retirement account, you may be able to borrow against or take out funds (penalty free) towards a downpayment.

Clean house – Yes and you are looking for items that you don’t need and don’t use.  Turn them into cash through flea markets, yard sales, consignment stores, and online websites like Ebay.

Use any of these tools to make home ownership a reality for you and your family and use a Realtor to find that home. 

Joan Parcewski, Realtor & Notary              Joan@WoodsRE.com     www.JoanParcewski.com/                                                                                            

GRI (Graduate Real Estate Institute, CBR (Certified Buyers Representative), SFR (Short Sale & Foreclosure Resource), LMC (Loss Mitigation Certified), CDPE (Certified Distressed Property Expert), CIAS (Certified Investor Agent Specialist), SRES (Senior Real Estate Specialist), GREEN

YOU are my Top Priority.  I believe that ongoing Education as well as Experience are important components of success both personally and professionally.  Let’s work together to implement the most current strategies to make YOU successful in your real estate journey, while building a lifetime relationship.

 

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