There is a lot of home financing advice available today and with banks being more cautious about lending, it can be very beneficial to heed much of it. A borrower can avoid some of the headaches to get a pre-approved for a mortgage by heeding some of these tips: Pre-approval for a mortgage loan can shorten the lending process. Many mortgage lenders will review all of the home shopper’s financial information even before he has decided to make a bid on a house. Nearly all mortgage lenders will examine a person’s debt-to-income ratio prior to lending a potential borrower any money. To know how much an individual will qualify for, he needs to understand his debt-to-income ratio. A person’s monthly mortgage payment, including principal, interest and taxes, should not exceed 28 percent of his monthly income. His overall debt payments, including student loans, credit cards and medical bills, should not exceed 36 percent of his total monthly income. Even though it can be exciting to shop for furniture and appliances, these major purchases will show up as increased debt on the potential buyer’s credit report. A lender may run a last minute credit report prior to the closing date. It is important to avoid any purchases that could change the debt-to-income ratio or cause worry. Once the home purchase has gone through and the financing is taken care of, then you can start shopping for the furniture and appliances that you need for your new home. Also, keep in mind that you don’t have to buy everything right away, you can slowly furnish your home as the money is available. Prior to the closing date, it is also recommended that the potential buyer not make any sudden changes in career. Fluctuations in income can worry the bank and the seller, so that the buyer could lose the house. High LTV Ratio – The higher is your Loan To Value (LTV) ratio, the lesser are your chances of getting an approval for a mortgage. LTV reflects the amount of loan you apply for approval as a percentage of the total value of your home. For instance, if you intend to borrow $ 200,000 for a house worth $250,000,00 , your LTV would be 80%. An ideal LTV at which almost all banks are ready to finance is 80%. Some banks lend on higher LTV ratio but they also require buyers to purchase private insurance (PMI). If you are in search of a new job, you should wait to change jobs until after all of the paperwork is signed. Even then, it is a good idea to make sure that you can still afford the home if you decides to make a switch. Shop around for the best rate. The buyer’s primary bank may not be the one that is best suited for his mortgage, so looking around for other options may provide alternatives that offer cheaper financing. A lower interest rate means a lower monthly payment or being able to afford a higher loan . The individual should go to several different banks and get quotes. Select a loan program that best suits your personal and financial needs. Consider such things as how long you plan on living in a home or if your income will be increasing significantly in the coming years. Find the Right Deal. If I made a dollar every time someone told me there were no more deals, I’d be a multi-zillionaire by now! Here’s the thing and I want you to get it through your head! There are PLENTY of deals – even where you live! Make a consistent effort to really look for houses that are overgrown, in need of paint, possibly boarded up, etc. And there is new list of properties that comes on the market every week. The prices are low because the mortgage company wants to get the property sold in just a matter of weeks. No matter what you do, never purchase property that is known to be in a bad neighborhood. That’s just bad for business, period. It really doesn’t matter how nice the property is. As long as that house is located in a neighborhood that most, if not all, people would consider a threat to a person’s health and security, stay away from it.
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