Could your debts hold you back from buying a home? It’s possible, because mortgage underwriting includes calculating your DTI, which stands for debt-to-income ratio. The more debt you have outstanding, the less money you have available for a mortgage payment.
In a prior blog post about what home buyers should know about credit scores, we discussed how credit scores can affect your mortgage payment. Today, we’ll talk about the different types of credit scores, and why the score your lender uses could vary from the score you know!
With home inventory slim in many areas of the country, home buyers face plenty of competition! A mortgage pre-approval can make the difference between getting your purchase offer accepted, or having the seller choose another offer by a better-prepared buyer.
A mortgage pre-approval means a lender has verified your creditworthiness for a certain loan amount during a fixed timeframe. A mortgage pre-approval considers your income, employment, credit history, debts and overall ability to afford a home.
In a prior blog post, entitled “What Home Buyers Need to Know About Appraisals,” we explained how appraisals work, and how they can sink a home sale when the appraisal value does not agree with the sale price. Yet appraisals can delay a home sale for another reason as well.
Unison Equity Investment Program in Limited Pilot with Freddie Mac
Would you be willing to give up future home value appreciation, in return for help with your down payment today? Unison, a San Francisco-based company, offers home buyers exactly that.
Here is the concept, as explained on Unison’s website, abridged:
It takes about six weeks to close on a home in most areas of the country. Much of the reason is beyond a home buyer’s control; complex regulations, appraisal backlogs, and last-minute snags. Yet the most common reason for closing delays rests squarely on the home buyer.
National real estate statistics show that problems with home buyer financing account for 38% of all closing delays. This same problem accounts for 21% of all failed closings!
While the Federal Reserve declined to raise its benchmark rate in September, a future rate hike seems likely this December. The last rate hike was in December 2015, when the benchmark moved up by one-quarter of a percentage point.
Most home buyers do not breathlessly follow economic news. Yet there are good reasons to pay attention to future announcements by the Federal Reserve. Here’s why!
How the Fed Works
You can buy a home with as little as 3% down, but there is a catch! When you finance your home purchase with less than 20% down, you will be required to carry mortgage insurance. The mortgage insurance protects the lender from financial losses if you default on the loan and fall into foreclosure.
Mortgage insurance is commonly referred to as PMI (Private Mortgage Insurance) or MIP (Mortgage Insurance Premium.) Simply put:
Buying a condominium may become easier in the near future, thanks to recent changes in the Federal Housing Administration (FHA) mortgage program. The new FHA mortgage rules, applying specifically to condominiums, became effective August, 2016 with the passage of Bill H.R. 3700.