Category: First Time Home Purchase

First Time Home Buyer Colorado – Get Pre-approved Mortgage

May 22nd, 2017 by

Importance of Being Pre-Approved By Your Mortgage Lender Before Shopping for a Home

The housing market here in Colorado Springs, Denver, and Castle Rock is different than in past years. There are not many as many homes available to buy. So when a house becomes available on the market, there can be much higher interest in that home, and it is common for several offers to be put on that home within the first day or two.

Pre-Approval Letter with Contract

When potential buyers put in the offer, the seller’s real estate agent is requesting that it is accompanied by a pre-approval letter from a mortgage lender showing the offer is from a qualified buyer. So if you want to put in an offer on any homes that you see, you will need to be prepared to move quickly, because typically that house will go under contract right away.

home morgage pre approvalKnow Your Mortgage Payment Amount

The second reason you want a pre-approval first is because you will be more informed on what your down payment requirement will be, what the closing costs will be and who you would like to pay for them, and what your payments will be. I’ve had clients put in an offer, and then come to me for the pre-approval letter, and they were shocked by how low of a payment I could get them. They realized that they could have put in an offer on a larger home that they liked more that they had seen earlier that week, but it was now too late as that home was already under contact by someone else.

Get the Right Mortgage Loan Program

The third reason is you may be able to get a better rate or qualify for a better loan program if you prepare first. One of the jobs of your mortgage broker is to analyze your credit report. Sometimes there is incorrect information that needs to be removed from your credit report, and it could raise your credit score substantially. Or I’ve seen where just paying down a bill a couple of hundred dollars can raise the credit score by 20 points. Now you qualify not only for a better interest rate, but sometimes can open up some other programs that might have a lower payment with it.

The reasons vary from the fact that you are going to need the pre-approval immediately, to being better informed and prepared before you go to put in your offer, and getting the best rate and program that you possible can. Always get pre-approved before shopping for a home.

First Time Home Buyers: What Are Lenders Looking For To Qualify Someone For A Home Loan

April 11th, 2017 by

First Time Home Buyers: What Are Lenders Looking For To Qualify Someone For A Home Loan

 

Lenders look at potential borrowers similar to the way that you would look at someone that you were going to lend $200,000 dollars to.  But we can break it down into 4 basic criteria that you should know as you start going through the process of buying a house in Colorado Springs.

(LTV) Loan to Value

LTV is a simple percentage of how much you want to finance versus the value of the house. For example, if you want to buy a 200,000 dollar house and want to put down 3.5% ($7,000), then you would be financing 96.5% of the value of the house.

Equity Mortgage Loans in Colorado Springs, CO

VA loans do not require a down payment, but FHA loans and Conventional loans usually do, anywhere from 3.5% to 5%.

Credit Score

Credit tells the lender if you have paid people back when you’ve used credit before. They look at your credit score and your payment histories on each trade-line.  They also look for any bankruptcies, foreclosures, judgments, and collections.  These may not exclude you from buying a house, but they will just factor into the final decision depending on the loan product you choose.

(DTI) Debt to Income ratio

DTI is a simple percentage calculated by the amount of monthly bills that you have on your credit report compared to your monthly gross income each month. So if you have $2500 dollars in bills each month and you show $5000 dollars of income each month, then you are at a 50% debt to income ratio.  Most home loan programs would like to see you at 50% or lower.

Savings

Reserves show the lender that you can save some money for those unexpected hard times that everyone goes though at some point. If you have 1-2 months of money saved up, then you will be more prepared to make a house payment even if you lose your job for a month or two.  Most programs don’t require any reserves, but the more you have, the stronger your loan application will be.

Most loan programs have several hundred pages of guidelines for underwriters to follow to approve the loans.  But in general, these 4 items are where they start.  Being a knowledgeable home buyer will improve your chance of getting approved, and getting the correct loan product that fits your needs the best.

Call Fidelity Mortgage Solutions today and we will give you a free analysis of your situation, and fit you to that best product.