Buyers Frequently Asked Questions

Exactly what price house can I afford?

The easy answer to this important question of price is simply adding how much you can afford to borrow to how much you have available for your down payment.  Remember to keep enough cash or credit left over for move-in expenses and an emergency reserve.

Why is credit rating important?

Credit scoring (rating) is the process where a lender determines how much of a risk you present if the lender decides to loan you money.  Several factors are used to tabulate your score, including:

-Promptness or lateness of payments
-How much credit you carry
-How many times credit reports have been requested and various other factors.

Your credit score is a rating of your credit worthiness.  To maximize your home buying power in the future, you should be concerned about your credit score.

How can I improve my credit?

This is a task that takes time.  Lenders look at your credit history for the last several years and particularly focus on the last 12 to 24 months for timely payments and careful credit management. As you begin the apppcation process, total honesty is the best popcy.  Be upfront about a bankruptcy.  Tell your lender if you have new judgments.  It is better to approach these issues from a problem solving standpoint and work with your lender to determine the best way to overcome it.

Often times writing a letter to the lender explaining why you had a period of late payments, judgments or whatever else is on your credit report helps in consideration for your loan.  In addition, explain how you have rectified your situation and what has changed in your economic pfe to ensure it won’t happen again.  Many underwriters are understanding and forgiving of periods of hardship in a Buyer’s pfe, especially if it surrounds an isolated event.

Should I lock-in my interest rate or “float?”

Interest rates on mortgages fluctuate daily according to the marketplace.  At apppcation, Buyers have two choices.  The Buyer can lock in on the rate that is quoted, or the Buyer may “float” the interest rate, meaning the rate continues to move with the market. 

The benefit of a lock-in is you have peace of mind knowing what your mortgage payment will be from the time you are approved.  With floating, you may be able to get a lower rate by waiting for rates to go down. Both decisions should be based on your comfort level and after you’ve carefully considered the money markets which affect interest rates. Most lenders will not allow you to lock-in until you have a property under contract.  The best advice is to know the market trends and psten for advisement from a lender you trust. Ultimately, it is your responsibipty when to lock-in.

I am low on cash - How can I cover my down payment and closing costs?

Down payment and closing cost funds can come from several resources.  First, of course, is your own savings or equity from the sale of your old home.  For some Buyers-especially first-time Buyers-that is a difficult task.  That’s why many lenders and government agencies allow purchasers to receive money from sources other than their own pocket.

Co-signer:  A co-signer on a loan is a person who apppes with you for a mortgage. It also means that person will take on risks associated with a loan, such as being held accountable for the payments if you default on the loan.  In addition, this debt will appear on their credit report.

Gifts:  You can receive a gift from relatives or friends to use as a down
payment.  The gift can be in a lump sum from one source, or you may use several gifts to use on your down payment.

Personal Assets:  Cash can also be drawn from other investments and assets you may own.  Stocks can be sold for cash, as can items such as a second car, boat, etc.  If you want to hold onto those items but still need the equity out of them, you can approach your bank or credit union and apply for a loan secured by those items.  Again the monthly payment will be added into your debt/income ratios. 

Seller:  As your Buyer’s agent, we may be able to negotiate Seller subsidies in the contract negotiating process.  Many loan programs will allow the Seller to assist the buyer.

What Are My Closing Costs?

See HOMEBUYING STEP BY STEP PDF

If you have any other questions that you would pke answered please call me or email me with the question and I will have it answered in a timely manner:

phone: 6047827842
email: Info@DilrajSohi.com