Hints To Increase Your Purchasing Power
Choosing a zero point loan will decrease closing costs. You might also investigate sources other than your bank account for your down payment and closing costs. You could consider asking a family member for a gift, borrowing against your 401K, insurance policy or pension plan, or using an income tax refund.
Here are some other alternatives:
- **Seller Assistance** When sellers are anxious to sell their home, they may be willing to pay all or part of the closing costs, or contribute in other ways to free up the buyer's money for the down payment.
- IRAs. If necessary, IRA funds can be withdrawn early to make home ownership possible. (There may be early withdrawal and tax penalties, so use caution when considering this option.)
- Co-Borrower. Two parties may join together to buy a home. By combining the resources of two wage earners, a home may be purchased and a higher mortgage amount may be obtained. The co-borrowers may choose to live in the home together, both benefiting by the tax advantages and appreciation of the property.
The income of a cosigner may be used to help you qualify in some circumstances. A cosigner is an individual who is willing to go on the loan with you, but will not be living in the home.
By choosing a longer loan term, you will decrease your monthly mortgage payment. This will also decrease your ratios. Choosing a longer term will decrease your monthly mortgage payment "expanded" or higher debt ratios. Months before you apply for your mortgage consolidate your debts by taking out one loan and paying your bills with the money. Pay off long-term debts by using some of your cash and making a lower down payment.
If you have demonstrated that you've paid your loan obligations and any other required payments such as rent and any child support or alimony on time, that will be a major advantage to you. If you have experienced past credit problems, be sure to explain why payments were late or how a bankruptcy was handled when you submit your application. Your explanation will greatly assist the lender in fairly interpreting that information. If you have credit issues, GSF & HBRC have programs available for you.
If you are unsure of your credit history, you may wish to review your credit report before applying for a mortgage. You can request a personal credit report for a small fee by calling one of the following credit reporting agencies:
Experian: 1-800-682-7654
TransUnion: 1-800-916-8800
Equifqax: 1-800-685-1111
When you review your personal credit report, note any late payments, collections, judgments, or bankruptcies. Be prepared to explain them. Resolve any discrepancies on your credit report with the credit-reporting agency. Also be sure to close out credit lines you are not using.
We Will Give You Sound Advice On What Plan Works Best For You !
Your Income
We must establish that your income will satisfy the monthly mortgage payments to pay for your new home. It is important for you so that the payments fit your budget. We will calculate your gross monthly income in order to assess your ability to repay the mortgage debt. In addition to your regular employment income, other steady sources of income like unemployment, social security, disability, pension, alimony, child support, bonuses and overtime might be considered. The length of your employment at your current job and the consistency of additional income will also be taken into account.
Debts
The monthly payments for all your debts (liabilities) are factors in determining how much mortgage you will qualify for. Typical liabilities include car loans, credit cards, and home equity lines.
Your future mortgage payment is also a determining factor. Your monthly mortgage payment is calculated by adding monthly principal and interest payments to monthly taxes, homeowner's insurance, and mortgage insurance payments. It will also include homeowner's association dues and flood insurance, if applicable. Your total monthly housing payment is sometimes referred to as PITI (short for Principal, Interest, Taxes and Insurance.)
We will calculate two ratios to help determine if you qualify for a certain mortgage amount. One is the housing debt ratio - the monthly housing debt (PITI) divided by your gross monthly income. The second ratio is your total debt ratio - the monthly housing debt plus any other outstanding debt divided by your total monthly income.
Credit History
The history of how responsibly you've handled debt in the past will become a very important consideration when a lender considers a mortgage application. We will obtain a credit report, which gives us a record of your timeliness in paying of debts. It shows the balance of your debts, how many times you have made a late payment, and how late the payment was. The credit report will also show any outstanding judgments, collections and bankruptcies.
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