Buying/Refinance
Will your lender prepare a break even analyses for you?
Many home owners think they shouldn’t refinance unless they can drop their interest rate at least two percent. However, with today’s low closing costs and no-closing cost options even a slight drop may make it prudent to do so. I can prepare a break even analyses to help you determine if refinancing is right for you. It will show you the closing costs involved in refinancing and calculate your monthly savings as well. The closing costs divided by your monthly savings will show you your break even point in the amount of months necessary to recoup your closing costs and help you decide the best interest rate and loan program to choose.
Can You Qualify for a Mortgage?
The best way to determine this is to figure out your debt-to-income ratio. As an example, if a loan program uses a 28/36 qualifying ratio, it means the homebuyer is allowed to spend no more than 28% of his or her gross income on monthly mortgage payments and no more than 36% on total debt. Total debt includes car and school loans, credit cards, child support and alimony. More specifically, if an individual earns $60,000 per year, his or her monthly gross income is $5,000. Under the 28/36 guidelines, that person’s maximum monthly mortgage payment should not exceed $1,400 while his or her total monthly debt should not exceed $1,800.
How Much Home Can You Afford?
Commonly paid in cash, down payments are based on a percentage of the home’s selling price and are due at closing. If you are able to make a down payment of 20% or more, you can save money — between $20 to more than $100 a month — and avoid the cost of mortgage insurance. If you don’t have 20% to put down on a home, remember that there are other options out there. Many affordable mortgage programs exist, including a few that require little or no down payment. Additionally, zero down payment programs are available for some veterans, active-duty military personnel and reservists.
How’s Your Credit?
All lenders require a credit report that contains personal financial information such as loan payment information, bank and credit card accounts, and more. You are able to obtain a copy of yours by contacting any one of the credit bureaus throughout the United States.
