What is required to buy a home?

Question

I would like to know more info on getting approved for a mortgage. What should a fico be at? income requirements, job info, bank account should be at what...etc etc...I would like to know basically everything there is to know before I go to get pre approved for a home and how to maintain the payment and not go into foreclosure.

Answer 1

This is a great question and it is one a lot of people want answered.  It is a little intemidating to appy for a huge loan and sometimes we don't want to ask a question and look dumb.

I have been selling houses for thirty years now.  The answers to these questions change all the time.

First thing I would do is ask several freinds and relatitives who have bought homes recently in the area you are wanting to buy "Who did you use for a loan officer?" and "Who did you use for a real estate agent?" also ask them if they were happy with the service.

Then I would contact the loan officer and visit in person or over the phone.  You want the guy to be local and you want  the guy to be able to answer all your questions without making you feel stupid.

They will want all your finacial information.  Where have you banked and lived, and worked for the last five years?  Who do you owe and how much over the last five years?

Based on the answers to all your questions, plus your fico score and how much you have to put as a down payment they will be able to reccommend a loan.

They will likely qualify you for a bigger payment than you are comfortable making.  Keep your house payment to no higher than 30% of your gross family income.  By payment I mean the principal plu interest plus the escrow for property taxes and home owners insurance.

There are a few states that have something like sales tax or transaction tax on home sales.  The local Realtor and loan officer would know if that is true in your area.  There are also "closing costs" that the buyer pays and closing costs that the seller pays- they can also line these out for you.

Always insist on getting a home inspection.  It is an added cost that you pay (you want to pay it and make sure the inspector knows they are working for you and no one else).

Answer 2

You will need a FICO score of at least 750 in order to qualify for the best interest rates.  With the credit crunch, loans for people with FICO scores under 600 or so will probably have a hard time qualifying.  Also, you should try to get at least 10% saved for a down payment (preferrably, a 20% down payment in order to avoid PMI).  There is no set rule for how much home you can afford but you should look at spending around 30% of your take home for the mortgage.  If you only qualify for an interest only rate loan for 30%, then you are trying to get into a too expensive home.  Also, the credit crunch has lowered the amount of no verification loans, meaning that you need to have a few months worth of pay stubs to show that you have a steady income.  Good luck!

Answer 3

They base the amount you can spend on a home on your income. You can buy a home with a not so great fico but your interest rate will be higher. It is also good to have a 20% down payment. I suggest not buying a home that is too expensive. Even if they tell you you are approved for a $300,000 home doesn't mean you should buy one for that amount. Find a nice place you can afford. Something that has a mortgage payment at about what you pay for rent. There are usually lower interest rates for first time home buyers.