Homeownership can be a very exciting and very overwhelming time. If this is your first time purchasing a home there are so many different avenues and nuances to the home buying process that it can be extremely overwhelming. However, as an Oahu home specialist I want to make it as easy as possible and tell you the first step on the road homeownership.
When you decide to buy a home it can be exciting to look at homes, browse neighborhoods and tour open houses. While this is exciting it shouldn’t be your first step. The very first step is to find out how much home you can actually afford. I can’t tell you how frustrating and discouraging it is to speak to a buyer that has found the home they love only to discover they have no idea how much they can afford and eventually realize they can afford the home they love. Finding out your price range before looking at homes is really the first stop on the road to homeownership.
This is a little more intricate than putting in your income in an online calendar. These online calendars can only factor in a couple of different figures. A lender or mortgage officer will look over all of your income, assets, liabilities and any debts that you pay on a monthly basis. From there, they can determine how much of your income can go towards the house payments. From there, they determine with taxes and insurance the maximum amount you can spend on a home.
The mortgage lenders will need basic information such as your tax returns, pay stubs, W-2s and any information on debt including car payments, loans, student loans, credit cards, child support and alimony payments. All of these will factor into your debt to income ratio. Lenders like to see no more than 30% of your income going toward housing payment, which also needs to include taxes and any insurance. You may be able to afford the principal and interest payment on a $300,000 house but factor in taxes and insurance and you may be out of that market. Home loan expert is someone that will figure out all of these numbers and give you a final maximum amount.
Once you have this figure your home loan expert will issue a letter of preapproval. This means that you’ve gone through the steps necessary to apply for a home loan and have proof that you can afford the home you may be making an offer on.
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If you haven’t begun this process yet give me a call. I would be happy to run some numbers over the phone with you or sit down and go over all of your debt to income ratio to give you an exact figure so that you can go out there and find a great home in Oahu.