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Home Financing

If you do not plan on paying cash for your new home, securing financing for your purchase is one of the major steps towards homeownership.

There are three key factors that are used to determine the ideal price range for your purchase:

1) Your ability to qualify for a mortgage.

2) The money that you have, or will have available for a down-payment.

3) The money that you have, or will have for the borrower's closing costs.


Factors used by the lender to qualify a borrower for a mortgage

Income: Actual current and recent (typically two years) history of income, stability of income, potential for future earnings, education, training and work background, as well as secondary income, such as bonuses, commissions, child support, etc.

Credit report: The lender will review your credit, including credit score, history of debt repayment, total outstanding debt and available credit.

Assets: Lender will consider your liquid assets, such as savings and checking accounts, certificates of deposits, stocks, etc. Some borrowers will ask for the lender to consider gifts from a family member or down-payment assistance program to be used as a source of down-payment.

Property: The property that you purchase will be used as collateral to secure the debt. For this reason, the lender will order an appraisal.


Down-Payment Requirements

The amount of down-payment that is required by the lender depends on the type of loan that the borrower is selecting, as well as the loan amount that he or she will qualify for relative to the purchase price of the home.


Closing Costs

There will be closing costs related to the mortgage broker creating the loan, costs related to the transfer of ownership, insuring the title of the property, homeowner's insurance and in many cases other pre-paid items that will be held in escrow after loan inception by the lender.

Your bank or mortgage broker will help you understand all of the aspects of financing the purchase of your new home.

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