By now you have been hearing a lot about how obtaining a mortgage may be more difficult than in past years. Truth is that the process is now getting to be a little easier! You see, in the past lenders would speak with the Buyer to see if what they were saying was lining up with purchasing a home and then based on that conversation the lender would provide what we call a pre-qualification letter. Once lending restrictions became tighter in the wake of the housing crisis, lenders were then having you submit an online application that would go over your credit, income, debts and so forth. Only after this application was received would they issue what is called a pre-approval letter. And for a long time now it has been absolutely necessary for a Buyer to have one before submitting an offer on a home .
What’s your debt to asset ratio
As of tomorrow we have the Qualified Mortgage going into effect and it will change some things. Now, instead of just looking at a general overview of what your debt to income ratio is, the lenders will be looking closely at the number 43. Why 43? It is the percentage of your debt to income ratio. If you are under that number you are sitting pretty. However, if your debts do exceed 43% of your income, some lenders will refuse to issue a loan. Take heart if you are in the over 43% group though. Chances are good that you may still get a loan, but there could be a premium. Some local lenders may work with you to do an in-house portfolio loan. Either way you as the consumer need to be on top of your finances and know your options.
Being prepared in a seller’s market pays off
We have a checklist of items from one of the lenders here in Madison that will guide you through what the underwriters will be looking for when you apply for a loan. In most cases having these items at the ready will ensure a very smooth transaction for you because you will know exactly what you qualify for in terms of purchasing power and you will be ready to go. Without these items it would be a waste of your time to start the process. And you will be at a severe disadvantage in a very tight seller’s market. Buying a home is an incredible experience and we at Lauer Realty Group want you to have the latest information in order to ensure a great home buying experience!
If you would like to hear about the checklist of items lenders are looking for in order to start your home buying journey in 2016, call Mark today at 608-658-0467.
If you would like to know the value of your home right now, check out our free home value report. It takes a hyper local-look at all the houses in your immediate neighborhood, the sales over the past few months and differences between asking and selling price to give you an extremely accurate look at the market.