Imagine finding the home of your dreams and then not being able to buy it.
I receive calls often from people who want to start shopping for a home before they have been pre-approved for a mortgage. The home buying process can be an emotional roller coaster for those who are well qualified but if there are problems with your mortgage or down payment it can make things much worse.
If you start shopping before you have talked to a lender you may fall in love with a home that you are not able to afford. After that everything that is in your price range may seen to pale in comparison. If you are shopping in a fast moving sellers market not having the proper pre-approvals can prevent you from making an offer on a property and it may sell before you are ready. Take the time to speak to a qualified lender so that you are prepared for the process.
Here are a few things to help you get started.
Mortgage lenders use two calculations to determine whether or now you are eligible for a mortgage. Your GDS (gross debt ratio) and your TDS (total debt Service). Your GDS is the percentage of your gross monthly income that is used for mortgage payments, taxes and utilities. Most lenders want to see your GDS ratio less than 32% of your gross monthly income. Your TDS is the percentage of gross monthly income required to cover your housing costs plus all your other debt payments like car loans and credit cards. Your lender will want to see less than 40% of your gross monthly income going to debt repayment.
Speaking to a qualified mortgage professional is a great first step in the home shopping process. They will walk you through the process and answer all of your questions. They will also work with your Realtor to help you when it comes time to make an offer on the home of your dreams. I have lenders that I work with frequently at most of the major financial institutions. I would be happy to help you out if you need a referral.
EXIT Realty Twin Bridges Brokerage
Office: 519-542-1000 Direct: 519-328-4963