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Jodie Collins & the QBee Team

A Texas Realtor for Keller Williams Professionals in NW Houston

KW Professionals

About the Home Loan Process

With today’s ever changing mortgage rules and requirements, please make sure that you take the time to research and interview a qualified mortgage broker that meets all your needs. Remember, they may not be the one advertising the lowest interest rates. Until you go through the entire approval process, no one can guarantee a fixed in rate.

Home Loan Money with Calculator

10 commandments: When applying for a home loan

  1. Thou shalt not change jobs, become self-employed or quit your job.
  2. Thou shalt not buy a car, truck or van (or you may be living in it)!
  3. Thou shalt not use charge cards excessively or let your accounts fall behind.
  4. Thou shalt not spend money you have set aside for closing.
  5. Thou shalt not omit debts or liabilities from your loan application.
  6. Thou shalt not buy furniture.
  7. Thou shalt not originate any inquiries into your credit.
  8. Thou shalt not make large deposits without first checking with your loan officer.
  9. Thou shalt not change bank accounts.
  10. Thou shalt not co-sign a loan for anyone.
     

The Differences of Pre-Qualification and Pre-Approval

Pre-qualifcation will help you in the following ways:

Generally, interest rates are locked in for a set period of time.  You will know in advance exactly what your payments will be on offers you choose to make.

You won’t waste time considering homes you cannot afford.

Pre-approval will help you in the following ways:

A seller may choose to make concessions if they know that your financing is secured.  You are like a cash buyer, and this may make your offer more competitive.

You can select the best loan package without being under pressure.

How Much Can You Afford

There are three key factors to consider:

  • The down payment
  • Your ability to qualify for a mortgage
  • The closing costs associated with your transaction.

Down Payment Requirements

Most loans today require a down payment of between 3.5% and 5.0% depending on the type and terms of the loan.  If you are able to come up with a 20-25% down payment, you may be eligible to take advantage of special fast-track programs and possibly eliminate mortgage insurance.

Closing Costs

You will be required to pay fees for loan processing and other closing costs.  These fees must be paid in full at the final settlement, unless you are able to include them in your financing.  Typically, total closing costs will range between 2-5% of your mortgage loan. 

Home Loan for Mansion

Qualifying for the Mortgage

Most lenders require that your monthly payment range between 25-28% of your gross monthly income.  Your mortgage payment to the lender includes the following items:

  • The principal on the loan (P)
  • The interest on the loan (I)
  • Property taxes (T),
  • The homeowner’s insurance (I).

Your total monthly PITI and all debts (from installments to revolving charge accounts) should range between 33-38% of your gross monthly income.  These key factors determine your ability to secure a home loan: Credit Report, Assets, Income, and Property Value.