Mortgage FAQs

Question: What Can I Afford?
Answer: What you can afford, from a mortgage lenders perspective, is primarily a matter of comparing your gross monthly income with your current and anticipated monthly expenses. In general, lenders prefer that borrowers spend 28 percent (or less) of their gross income per month on a mortgage payment or no more than 36 percent on all debts.

Question: How do I get started buying a home?
Answer: Determining what you can afford is exactly the place to begin when thinking about purchasing real estate. Knowing this will make your search more focused and help you avoid frustration. Pre-qualifying for a home at the beginning of your search is also a wise move. A prequalification is a simple calculation that considers several factors, but primarily your income. Prequalification is not a commitment by the lender, but nowadays it is expected of you when you make an offer on a home.
Question: When is the best time to buy?
Answer: This varies a little by region; however, the market starts to pick up as early as February in most parts of the country. This is because buyers with children usually prefer to move in the spring or summer in order to be settled by the beginning of the school year. The market tends to be slower during late summer, November and December. Of course, from a negotiation standpoint, a buyer who is in the market during the slower months may be in a stronger bargaining position if they find a home on which they want to place an offer.
Question: How can I save on closing costs?
Answer: According to published studies, closing costs average two to three percent of the home’s total purchase price. Here are some ways that borrowers can save money on them:
• Shop for the best loan deal before submitting your final loan application.
• Have seller pay all or part of the closing costs. This must be negotiated with the seller and agreed to by the lender.
• Carefully consider a no-point loan. The downside is that it will come with a higher interest rate and may have prepayment penalties. Nevertheless, if you are short on cash and can qualify for a higher interest rate this option might significantly reduce closing costs.
• Offer to rent the property with an option to buy. That will allow you more time to save purchase.