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Tips for Pre-qualifying in Today’s Market

by Masha Halpern

When starting the hunt for your dream home you first must know how much home you can truly afford.  The first step in buying your home is to have a budget and figure out how much you can actually afford. Your real estate agent or mortgage lender can assist you with this in a couple different ways: 

  •  Pre-qualifying process This process will give you a general "estimate" of what you will be able to afford.
  • Pre-approval process This process will allow your lender to review your finances in more detail in order to determine the amount of money they agree to loan you for your home purchase.

Your lender will review your finances and focus on a few main areas such as:

  • Gross monthly income
  • Credit history
  • Amount of outstanding debts
  • Source and amount of money available for down payment and closing costs
  • Interest rates, etc.

All these things put together will help your lender determine two important qualifying ratios.

1. Debt-to-Income Ratio Generally the amount of debt you pay each month should not exceed 36 percent of your gross monthly income

2. Housing Expense Ratio Most lenders will not approve your loan if the mortgage payment exceeds 28 to 33 percent of your gross monthly income

Determining how much you can afford to spend when purchasing a new home is your first step. For more information please feel free to contact me!

 

/kh

The Changing Face of Lending – Getting a Home Loan in 2011

by Masha Halpern

We’ve weathered a tough year in the mortgage market and if you’ve been waiting it for it to turn around, don’t expect much of a change in 2011. The market and mortgage collapse have changed the face of lending for some years to come. Planning on buying a new home in the new year? Here are five things you should be prepared for:

  1. It’s tough to get a mortgage. Lenders today face a couple of huge challenges – they just can’t get on the hook for more bad mortgage debt and they must operate under strict regulations on how much real estate they can have in their portfolios. How does this affect you? Your bank has no more ‘easy money’ for you. If you are borrowing outside of FHA backed guidelines, you may have a hard time getting that loan approved and closed.
  2. Good credit counts more than ever before.You can be turned down for a mortgage on the credit criteria alone. A good credit score will affect your ability to get a loan and the interest rate attached to it. If your credit is less than perfect, get busy now to repair it.
  3. No money down is no more. You are unlikely to find any lender that will offer 100% financing. Be prepared to hand over as much as 20% down, less (and more negotiable) on FHA loans. Your lender will also look at the status of your cash reserves, to make sure that you can handle your first payments
  4. Banks are cutting off their ARMS. Adjustable Rate Mortgages contributed to the housing bust and most lenders are wary – and you should be too. With interest rates so low, you are probably better off with a 30 year fixed, especially if you are planning to be in your new home for some time. In a volatile economy, an adjustable rate mortgage can blow up quickly if you haven’t prepared properly for it.
  5. Interest rates should stay low in 2011. While rates have crept up a bit recently, don’t expect a significant increase in mortgage rates this year. Experts see them hanging below 5%, so this could be the year to take action if you have been hesitant about buying a new home.

Overall, the mortgage business is still shaky. The good news is that you will still find great homes at low prices and that interest rates should remain favorable in 2011. The tricky part will be getting a lender to handle your loan.

 

/kh

Pre-qualifying Tips for Today's Home Buyer

by


How much home can you really afford? The first step in buying a home is to have a budget and figure out how much you can actually afford. Your agent or lender can help you with this in a couple of ways:

 

  •  Pre-qualifying process This process will give you a general "estimate" of what you will be able to afford.

  • Pre-approval process This process will allow your lender to review your finances in more detail in order to determine the amount of money they agree to loan you for your home purchase.

Your lender will review your finances and focus on a few main areas such as:

  • Gross monthly income
  • Credit history
  • Amount of outstanding debts
  • Source and amount of money available for down payment and closing costs
  • Interest rates, etc.

All these things put together will help your lender determine two important qualifying ratios.

  1. Debt-to-Income Ratio Generally the amount of debt you pay each month should not exceed 36 percent of your gross monthly income
  2. Housing Expense Ratio Most lenders will not approve your loan if the mortgage payment exceeds 28 to 33 percent of your gross monthly income

These are the first steps in determining how much you can afford when purchasing a new home. For more mortgage and finance information feel free to contact me.

Displaying blog entries 1-3 of 3

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Photo of Masha Halpern - Boutique Real Estate Real Estate
Masha Halpern - Boutique Real Estate
Keller Williams Realty
101 Cosgrove Avenue, Suite 200
Chapel Hill NC 27514
Direct 919-951-1780
Toll Free 877-478-4669
Fax: 919-928-9030




Masha Halpern of Keller Williams Realty provides real estate services in the Chapel Hill, Carrboro and Durham, North Carolina area including real estate services for buyer, sellers and those relocating to the surrounding areas of Apex, Bahama,Cary, Efland, Hillsborough, Holly Springs, Mebane, Raleigh, and Wake Forest. Search for homes in Chapel Hill, Carrboro, Durham or the surrounding communities.  Request a market analysis for your North Carolina property.  I list and sell residential real estate, investment property, vacant land, lots for sale in Chapel Hill, Carrboro and Durham, North Carolina area.

Chapel Hill, Carrboro and Durham, North Carolina real estate and homes for sale in North Carolina - Masha Halpern & The Smart Move Team