It is a good idea to get pre-qualified for a loan at the start of your home search. It’s important to know how much of a mortgage you qualify for that way you can focus your time on homes in your budget. When you find a home you want to make an offer on, you’ll already be pre-qualified and can make your offer confidently. 

In short, yes. Even if you plan on moving out of your home in a few years, you can still save money by refinancing. Oftentimes, you can refinance with little to no cost. However, it may not make sense to refinance when you have to spend a larger sum of money to buy down your rate since it could take many years to see any benefit. Loan officers will look at your balance and rate and can calculate if there’s any savings available to you depending on your timeline.

Taking a cash-out loan can be a great way to pay of debts. It can be overwhelming and costly to have numerous debts such as credit cards, cars, and student loans all accruing interest separately. Interest rates can be high, especially for credit cards. You can take cash out and pay off these debts. You’re left to pay off a bigger sum in your new mortgage but at a lower rate. Consolidating debt is one of the most common ways cash-out refinances are used, along with home improvements.

Private mortgage insurance or PMI is used to protect lenders in the event a loan defaults. In higher-risk loans, this protects the lender from losses. With a loan amount that is more than 80% of the home’s value, PMI is usually needed. For buyers with little down payment, PMI can make it possible to acquire a loan. Once the homeowner has 20% equity in the home, the loan is less risky and the PMI can be removed. PMI can be a hefty expense for homeowners but can be what allows you to be approved for a loan when you otherwise wouldn’t have.

Brokers have access to multiple lenders and programs, while banks only offer financing through their specific institution. That being said, brokers don’t have loyalty to one institution, but instead to the borrower. They will select a program from the institution that offers the absolute best financing for your financial situation. Because banks have such a limited selection, it can be harder for homeowners with unique financial situations. Brokers can get creative and access special programs since they offer programs many institutions. Our team has access to over 30 different banks and lenders. That being said, it can be easier to be approved for a loan when using a broker.

In order to know exactly how much you qualify for, you will need to discuss your financial situation with your loan officer/advisor. They will run a credit check to determine your total debt and will calculate your debt to income ratio. This is one of the most important factors in determining how much you can afford. There are ways to get an estimate of what you can afford, but it is impossible to say for sure until a credit check is performed, and all your debts are accounted for. The loan officer will assess your overall credit history and, if necessary, conduct credit repair. Our team uses a special program that allows us to determine the necessary action items in order to improve credit. This will also open up lower rates and better costs. Another thing to consider when determining what you can afford is having a sizeable down payment saved. The standard is 20% for conventional loans. However, there are other programs that allow a lower down payment. The most common program for a lower down payment is an FHA Loan. This program is also ideal for those with some troubling credit who have difficulty qualifying for conventional loans. There are also first-time homebuyer programs that allow for a lower down payment.

The need for an appraisal varies from case to case. If you took out a Franny or Freddie loan in the past few years, you can oftentimes receive an appraisal waiver, meaning no appraisal is required. However, homes of a certain value (more expensive) automatically require an appraisal, as well as cash-out mortgages. FHA and VA loans also require their own specific appraisal and do not offer appraisal waivers.

If you’ve foreclosed or filed bankruptcy, it will affect your ability to receive a mortgage. However, not all hope is lost. You will eventually become re-eligible for a new mortgage, but it takes many years and it’s likely you will get a higher rate than usual since lenders now consider you a liability Bankruptcies and foreclosures stay on your credit history for some time, usually around 7 years. Paying bills and debts on time can help you get back on track and rebuild credit, making you a more desirable candidate to lenders.

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