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Oleg Potemkin (RA)
Internet Marketing Specialist
Call (808) 398-9987
Hawaii Real Estate
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Oleg
Potemkin (RA) Hawaii Realty Associates, LLC
Honolulu, Oahu, Hawaii
Direct:
(808) 398-9987 Fax: (808) 538-8081 E-mail:
info@hawaii-realty.com
How Much Home Do I
Qualify For?
Income. Debt. Down
Payment. Closing Costs. Two Years Income Tax Returns. Assets.
Liabilities. IRAs. You want WHAT? Just what can I afford?
Buying a home in today’s marketplace is a bit intimidating. And
your new home purchase is likely to be one of the most important
decisions you’ve ever had to make. Usually it’s one of the
single most valuable assets you’ll own.
Where to Start
Before you invest hundreds of hours searching--and to avoid any
heartbreak if you find yourself unable to qualify for your dream
home--sit down with a lender. Your lender can perform a simple
verbal prequalfication in about twenty minutes and a full-fledged
prequalfication in about 5 days.
Pre-qualification not
only allows you to focus your search in the correct price range,
saving a lot of wasted time and frustration, but it can also give
you an edge when competing with other offers on a home that you
find. If a seller is deciding between two offers—-yours who has
been qualified and another unqualified offer, they are much more
likely to pick yours. Pre-qualification will also give you leverage
when negotiating with a seller in a non-competitive atmosphere; it
essentially makes you a cash buyer.
The amount of home that you qualify for will be determined by three
key factors: your down payment, your ability to qualify for a
mortgage and closing costs.
The Down Payment
Whereas a current homeowner can rely on equity from their home sale,
a first time homebuyer is limited to the money they can save. The
days of having to put 20 percent down on a home are in the past,
although putting a large amount of money down definitely makes it
easier to qualify for a mortgage and to get the lowest interest
rates available. With the various programs that are available today,
you can put as little as 3 percent down on a home.
Qualifying for the Mortgage
There are two basic guidelines that lenders use to determine what
size mortgage you are eligible for:
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Your monthly
mortgage payment of principal, interest, taxes and insurance (PITI)
should not exceed 25 to 28% of your monthly gross income.
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Your monthly housing
cost (PITI) plus other long-term debt should not exceed 33 to
38% of your monthly gross income.
Specifically, most
lenders will consider 4 key factors to determine your ability to
qualify for a home loan:
Income – This first element can include not only your gross
monthly income and secondary income (commissions, bonuses) but also
your history of employment, stability of income, education, even
potential for future earnings.
Credit History -- This encompasses your history of debt
repayment, total outstanding debt, highest balance, and your highest
monthly debt balance.
Assets – Your assets consist of cash on hand, savings and
checking accounts, CDs, stocks, bonds or any other type of liquid
asset.
Property – The home you are planning to purchase will be
appraised to determine the market value. The estimated value must be
sufficient to secure the loan. Lenders will loan you no more than a
certain percentage (usually 95%) of this value.
Closing Costs
Keep in mind that in addition to your down payment, you will also be
responsible for paying fees for the loan and closing costs. These
will be required at the time of closing unless you qualify and
choose to have these included in your financing.
-
Closing Costs
generally will range between 2 percent and 6 percent of the
mortgage loan, depending on the loan and lender. You will be
provided with a "Good Faith Estimate" of closing costs
so you can know what to expect.
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"Points",
which are one-time charges equal to one percent of your loan
amount, may be required by your lender at closing.
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Your closing agent
will charge a fee at the close of the sale.
The original author is
not known. It is not our intention to infringe upon copyrighted
material. If you are the original author of any of these articles,
please let us know so that we may provide appropriate credit.
Your
Hawaii Real Estate Specialist
Oleg Potemkin (RA) Hawaii Realty
Associates, LLC
4211 Waialae Avenue, Suite 1020,
Honolulu, Hawaii 96816 USA
Tel: (808) 398-9987 Fax:(808)
538-8081 E-mail: Oleg@Hawaii-Realty.com
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