Once you have decided you are ready for homeownership, the fun begins. Finding the right home is not always easy and finding the right mortgage can even be more difficult. As a Utah mortgage broker, we are here to assist you and simplify the home buying process as much as possible. To help you in the decision-making process we will take you through the steps of obtaining a Utah mortgage. A real estate professional can help you find the right home.
When applying for a mortgage loan you will complete and sign documents that certify your promise to repay the lender for the money that is being lent for the purchase of your home. During the qualifying process, we will use several factors to determine the likelihood of your ability to repay the mortgage that will be given to you.
Credit Report and Credit Scores
One of the first factors we will use to determine your likelihood to repay your loan is how you have fulfilled other obligations that you either have or have had in the past. To determine this information we will use your credit report, there are two determining factors we use. First is your credit history, this includes things such as the time you have had credit, have you paid your payments on time, the amount of debt you have, along with many other things. The next factor is your credit score that is based off many of the same things mentioned above, along with other details obtained. There are some general guidelines that help Advanced Funding in looking at these pieces of information about you. But you should also remember that there is some flexibility in these guidelines, everyone’s financial situation is different. If you are very strong in one area, it may help balance out another area in which you aren’t quite as strong. You may obtain a copy of your credit report at www.annualcreditreport.com.
Appraisal and Down Payment
Mortgage lenders will set forth certain requirements concerning the home you choose to buy. They will not take any responsibility for the purchase of a home that may have problems, but they will verify a home’s appraised value and that the home is in a livable condition. Certain qualifying factors will determine how much the mortgage lender is willing to lend you against the value of the home, in other words, how large of a down payment they will require. This is also referred to as loan-to-value (LTV).
Promise to Pay
A mortgage requires that you pledge your home as the lender’s security for repayment of your loan. The lender will place a lien on your home’s title until you have paid your loan in full. The lender has the right to take possession, referred to as a foreclosure, of your home and sell it in order to satisfy your mortgage debt if you do not fulfill your promises to repay the loan according to the terms of your promise.
Next, we will look at your ability to repay the Utah mortgage loan. We do this by calculating your gross monthly income (before taxes) and determining what we consider your monthly debt obligations. A good rule of thumb is that if it is reported on your credit report it will be considered an obligation. There are always exceptions but that is a good place to begin.
Cash to Close
Now we must take into consideration the amount of money you are planning on using to purchase your home, whether that is for a down payment, closing costs or, to pay off debt to help in qualifying. We also will want to know of any funds that will be remaining after the transactions have closed, for example, retirement plans, IRAs, annuities, savings, etc. It is also important for your mortgage broker to know if there were any seller concessions negotiated in the contract, or if you plan on negotiating these costs at a later time.
How Much Can I Afford?
When making the decision to purchase your first home or any home for that matter you must consider that based on the things mentioned above lenders will advise you on how much you can afford to pay for a home and how much you can afford to pay monthly. But, more important to that is for you to determine those things for yourself. Everyone is different, not all families spend the say monthly expenses such as insurances, groceries, medical bills, etc. Mortgage brokers and lenders do not consider these expenses when qualifying you, so always take the time to complete a budget before purchasing.
Visit our How Much Can I Afford Calculator to find out what you are able to qualify for.
And finally, remember to do your homework, find a Realtor and a Utah mortgage broker, such as Advanced Funding, that takes the time to share with you the benefits of home ownership along with the pros and cons of any mortgage loan. This will ensure that you finance your dream home with a mortgage that you can be satisfied with for a long time to come. There are dozens of options and it is important to understand the best ones for you, as a Utah first-time homebuyer, and that you are able to make an informed and educated decision in choosing the right home loan for you and your family.
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