Checklist For Obtaining A Home Loan – Part 2

Checklist For Obtaining A Home Loan - Part 2

Following up in a series from our most recent article. We discussed that in the current mortgage and real estate market, the more knowledge you have, and the better you will be prepared to end up with the best possible terms for the purchase or refinance of a home. It always important to know what you need and do not need in order to obtain a home loan and how your situation affects what you can qualify for. Whether you are considering purchasing a home or refinancing, putting everything in place to the best of your abilities ahead of time and knowing what is needed will help you to close your new loan efficiently and with less headeaches.

Debt To Income Ratio: The debt to income ratio refers to a percentage of your monthly debts in relation to your monthly gross income. In others words if your monthly income is $3,000 before taxes and you're the payments on your monthly debts is $1,000 you would have a 33% debt to income ratio. Those monthly debt payments include things like auto payments, credit card minimum payments, student's loans and installment loans. They do not include things like auto insurance, cell phone bills or utilities.

Depending on what type of loan you will be obtaining there will be a different loan to income threshold, but typically you will not want to have a debt to income ratio much above 40% in the current market, though it is still possible to obtain approval above that threshold with compensating factors.

That is because most all loans use automated underwriting and with other strong factors you can afford to have a higher debt to income ratio, but with less supporting factors, the lower debt to income ratio, the better. Calculating and figuring out where you stand and what you can possibly due to improve this ratio is almost as beneficial as your credit score itself and often times just as critical, when obtaining a home loan.

Loan Amounts: Yet another critical factor to understand and consider is that of loan amounts or rather loan limits when obtaining a home loan. That is because different home loans have different loan limits, which will affect how large your mortgage can be when obtaining that type of loan.

Currently in Maricopa County in Arizona, the conventional loan limit sits at $417,000 as it does as well for USDA financing. Further still, most people will quote the VA loan limit as $417,000, but in actuality VA home loans do not have an official loan limit. Anything above these levels will have to be a jumbo mortgage and then the process of financing changes all together.

On the other hand, if you are looking at an FHA home loan the current loan limits in Maricopa County sit at $346,250, about $80,000 less than conventional loan limits, but still adequate in many cases in the current marketplace.

Thus, it is obvious that when it comes to purchasing or refinancing it is important to know some of the keys to obtaining financing before you purchase or refinance your home.

For more information on current programs for existing and potential homeowners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com