During Covid, most lenders require a 650-680 fico score. However, there are loan programs available for credit scores ranging from 580-620, as well as high interest shark loans with less credit restrictions.
In today’s loan market, a typical loan requires a 3-5% down payment of the loan amount.
If your home has equity and you plan to use such funds towards your new home purchase, you will need to sell first. Some home owners decide to keep their original property as an investment property and can use the income from it to help qualify for the new loan. Your financial position will be very relevant to answer this question properly.
Having a Realtor is one of the most valuable assets to any real estate transaction! You should be able to rely on your Realtor to have your best interest at hand always. They will guide you through every step of your transaction and educate you on everything going on during the process of buying/selling. Your Realtor will also provide:
- Market insights: identifies home value trends, new developments, buyer demand and overall state of the market
- Offer price: determines what a home is worth and recommends a competitive initial offer amount
- Negotiating: knows when to argue for a lower price and how to negotiate contingencies and repairs
- Localfamiliarity: has insider tips about the neighborhood and area schools
- Professionalrecommendations: provides referrals for a trusted lender, attorney, contractor or other vendors
- Experience: simplifies the process by handling hiccups, staying on top of due dates and overseeing paperwork
A typical loan can take about 30-45 days to close and in some cases as many as 90 days to close in escrow. However, Cash purchases will typically close faster than a loan purchase as there is no diligence time to process loan documents.
An earnest money deposit or EMD is a “good faith” deposit towards the purchase of a home. A buyer typically offers the seller an EMD to convey their intrest and have the seller feel safe pulling he property off the market while the buyer works to process their loan. If the buyer backs out of the transaction, the seller is entitled to keep the EMD. Likewise, if the seller backs out, the buyer will recover their earnest money funds. Once the purchase transaction is finalized, all EMD funds will be applied towards the purchase price.
A home inspection is highly recommended and required with certain loan programs, FHA and VA loans. A home inspection will help disclose and latent defects in the home that are not easily noticeable to most people. Without an inspection, the buyer is taking on high risk.
A final walk-through is not required but it is indeed a great idea to ensure nothing has changed since your first tour of such property. Also, it will give the buyer the chance to inspect any repairs and contingencies that were set in the terms of the contract.
Square footage includes finished, heated space, also known as “livable space”. Garages, unfinished basements and attics, for example, are not included when calculating a home’s square footage. However, hallways and closets are included when determining a home’s square footage.
The mortgage pre-approval process will help you determine exactly what your budget is. However, as a general guideline, your monthly combined gross income for all people that will be on the loan, multiplied by 2 to 2.5 will give you a general idea of what you might qualify for.
Private mortgage insurance (PMI), is insurance that covers the lender on the mortgagee. This coverage is typically required on loans where the buyer is borrowing more than 80% of the value of the property. Some loans do not require PMI.
To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out
The ideal debt-to-income ratio to secure a mortgage loan is the 28/36 . This guideline suggests keeping total monthly debt costs at or below 36% of your income, and housing costs at or below 28%. The lower your debt-to-income ratio, the better.