21 03, 2015

The Reasons You May Not Be Qualifying For A Home Loan

2021-09-28T16:57:28+00:00March 21st, 2015|Blog, Buying a home, Home Finances, Mortgage 101, Tips & Advice|


iStock_000040148190_LargeApartment renting is great when you are a twenty-something college student and all of the best trendy restaurants are within walking distance of your home. It doesn’t take long, however, until those things slowly fade away and the desire to own a home becomes more than a thought. This is usually the point where you realize you need to evaluate your finances if you are going to apply for a home loan. Fast forward to the point where you have made the decision to buy a home and you are getting an approval. The bank comes back to you saying that you did not get approved for the loan. It can be devastating but if you know the reasons why you can’t qualify for a loan, the easier it will be to work on fixing them so that your dream of owning a home can become a reality.

Reason #1 – Your credit score is different than what you think

If you monitor your credit score through a credit monitoring service, good for you! Remember however these are not always accurate because they usually are only looking at one or two bureaus. When a mortgage lender pulls  your credit they look at all three bureaus and will usually look at the middle score as a measure of risk.

Reason#2- Your gap in employment is greater than six months

When you apply for a home loan  the lender will want to see two years of employment history. The lenders require this because they want to originate loans that will perform over a long time. When you have a gap of employment longer than six months, this usually is a red-flag to a lender. If  you hop around from job to job it can be even more difficult as […]

14 03, 2015

Calculating your Home Affordability

2022-05-23T18:43:50+00:00March 14th, 2015|Blog, Buying a home, Mortgage 101, Tips & Advice|

Mortgage calculator

One of the many questions people ask when you tell them you are looking to buy a home is, “What is your budget? How much are you looking to pay for a home?” Now, while that is somewhat of a personal question it is nonetheless a question you are probably asking yourself as well. “How much home can I afford?” There are a couple different ways you can approach the topic of home affordability in today’s market. Let’s take a look at the first approach.

Approach #1- Let the bank use your Debt-to-income (DTI) to determine maximum purchase price

When you go to a bank and ask them to calculate the maximum amount you can pay for a home they are not going to take into consideration what homes you have already looked at or what homes you may be interested in. Instead the bank will take your annual income and your annual debts and calculate the maximum amount you could pay on your mortgage without raising your debt-to-income ratio. Once they have found the maximum allowable payment size then they will then factor in today’s mortgage rates to come up with the maximum loan size you could borrow. The debt-to-income formula will not show you what should pay for a home but instead it will only show what you could pay without changing your debt-to-income. Your bank will check your DTI in two parts, front-end and back-end ratio.

  • Front End- This compares the expected house payment to the buyers monthly income. While there is no maximum limit on the front-end-ratio, banks prefer to see that the front-end-ratio is less than 28% of the buyers monthly income. You can still be approved if the ratio is above 28% but it is not as often.
  • Back End- This […]
7 03, 2015

5 Reasons You May Want to Refinance

2021-09-28T16:57:32+00:00March 7th, 2015|Blog, Home Finances, Mortgage 101, Tips & Advice|

Are trying to find ways to keep a little more of your hard earned money in your pocket each month? If so, refinancing your home might be a good option. According to the Bureau of Economic Analysis the average interest rate in 2012 was 5.098 percent. Nowadays lenders are offering rates much lower than that, therefore refinancing your mortgage is a no-brainer. While saving money is the number one reason many choose to refinance, here are a few other reasons one might refinance their home.

Reason #1: Refinance to get a lower rate and possibly shorten the terms of your loan. If you are paying 5% interest on a 30-year loan but you can get 3.25% interest on a 15-year loan the amount of time it will take to pay off is half of that while only adjusting your payments slightly each month. If it is in your budget to do this than that might be a good reason to refinance.

Reason #2: It will allow you to get out of an adjustable rate mortgage and get into a fixed mortgage. This doesn’t necessarily mean you will get a better rate but your rate will be stable therefore possibly saving you more money over the life of your loan. Because rates are so low, locking in a low rate now will ensure savings as opposed to an ARM  going back up over the next several years.

Reason #3: If you have equity in the home you can take out extra cash to pay down credit card debt, student loan debt, start a business, buy investment property, or anything else you may need the extra funds for.

Reason#4: If you have a second mortgage on the home, or a home equity line of credit, you can use your refinance to combine the two therefore getting rid of […]