Home Loan Qualifying Tips
Want to know the best home loan tip there is? Knowing how much and if you qualify for a home loan before you shop for a house will make your purchase go much smoother and will save you a lot of headaches.
Several other factors like down payment, loan amount and a good fico credit score will also make a difference.
However, here are a couple of home loan tips that will help. There are some general home loan guidelines and these estimates will give you a good idea of how much of a monthly mortgage payment you can qualify for.
1. Your monthly mortgage payment, taxes and home owners insurance and any other fixed housing expense should be between 25% and 28% of your total gross (before taxes) monthly household income.
2. Your monthly housing costs (the total figure above) plus any other long term debt (monthly expenses extending longer than 11 months) such as car or boat loans, credit cards, or installment loans should not exceed more than 40% of your gross (before taxes) monthly household income.
These figures can go higher if you have very good fico credit score because a high score means you are a better risk to a lender.
A good fico credit score to a lender usually starts at 680 and above. It will vary between lenders but a 680 score and above is a good basic guideline for getting the very best interest rates and terms for a home loan.
You may be asking why you need to find out what your credit score is before you talk to a lender? Obtaining a copy of your credit is a good idea in case there is something on your report that you may question. That way you can clear the matter up before a lender checks your credit.
You have probably heard that checking your credit will bring down your score. But checking your own credit report and score is counted as a "soft inquiry" and doesn't harm your credit score at all. Only "hard inquiries" from a lender or creditor, made when you apply for credit, will bring your credit score down a few points.
Your credit report should have the three major credit bureaus Experian, Trans Union and Equifax and each service will give you a different credit score.
If this is too time consuming or you don't fully understand something, talk to a mortgage professional. That is the best way to know exactly how much of a monthly mortgage payment you will qualify for because that is what they are trained to do.
They can give you a more accurate figure so there are no surprises when you go to make an offer. After all, owning a home is your dream and it should be a pleasant experience not a nightmare. Hopefully these home loan tips will help you get the house of your dreams.
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