Maximize Borrowing Power
Choosing the right lender to maximize your buying power is the most important step in getting your money’s worth. Consumer’s credit scores are only a part of the process in qualifying for a home loan. There are some major factors that are taken into consideration when buying a home those consumers may or may not forget to consider. If a consumer has had a Bankruptcy in the last two years, it’s from the day of discharge that is considered. If a consumer had a short sale and or a foreclosure, it is 3 years from the day it was recorded at the court house is the date the underwriters will consider.
To maximize your buying power, make sure you have all your proper documents ready for your lender.
Work history is a vital decision maker. Lenders are looking for a solid job track record. If you have been on the same job for 2 years or more, that is a positive factor. If you have had more than two jobs in the last two years, and in the same line of work, then you may be required to write what is also known as a letter of explanation. If you have had more than two jobs in the previous two years, it is taken into consideration of any job gaps, and inconsistencies can weigh into what is called risk management. Job history is an important factor. Before you apply make sure your job history is solid and ask if there are circumstances such as family emergencies that would be taken into consideration.
Down payments are also a big benefactor on getting the biggest return on your money. Having a bigger down payment can also insure you’re getting the best rate on your terms of your mortgage. Most consumers don’t know they can use their 401k for down payments, check with your 401k administrator. There are some companies that have lock down policies.
Seller paid closing cost. Sellers most of the time are eager to sell their home so they can close on their new home. Seller paid closing costs are another way to help maximize your buying power, ask as part of your offer letter, the most they can do is say no, this is part of the negotiation process your Real Estate Agent must ask for in your offer. Always check with your lender to ensure the limits on seller paid closing costs. Each state, each lender has guidelines regarding seller paid closing costs.
Hazard insurance. Insurance on the home is a requirement in order to close the loan. Typically the lender will collect 12 months of insurance through what is called an escrow. It is important to shop your insurance rates. Getting the smallest possible deductible is not always the smart financial decision to make.
Deductables. Consider the location of your property, ask questions about deductibles. Lenders also will have clauses on how much consumers can have for deductibles. Typically you should carry a minimum of 1% and a maximum of 3% of your home value as your deductible. There are other types of deductibles you can carry, make sure to ask all the right questions that surround your needs.