How Much Mortgage Can I Qualify For? It Might Depend On HOW You Are Paid!

Cash, income, credit history…the big three of getting an approved home loan. All equally important and all have very specific guidelines and documentation requirements. We mostly think of income when asking the question, “How much mortgage can I qualify for?”  This article is going to talk about income and why HOW your wages are paid  by your employer can make a huge difference in the amount of the mortgage you may be eligible to borrow. There are many methods of employment compensation. Just to name a few: Hourly Hourly with overtime Hourly with bonus Salary Salary with bonus Salary with commission Straight commission Wage paid by your own company (or family business) Ultimately what your lender wants to establish is the stability and consistency of your income. If you work a standard 40-hour week and are paid hourly or on a set salary; that’s the easy part and is fairly … Continue reading

Is Using Your 401K For Down Payment A Good Idea?

Your employer based 401K retirement plan may have an option for you to take out a loan against all, or a certain portion, of the account for “hardship” reasons.  Using your 401K for down payment on a home is considered a “hardship” reason. What is a 401K Loan? A 401K loan is money that may be available to you based on certain conditions of your 401K retirement plan offered by your employer.  The interest rate charged is typically lower than if you borrowed money from a bank.  Since it is secured money. That means the collateral for the loan is your 401K. Your mortgage lender will allow it to be used for down payment requirements on a new home purchase. (see video below for further discussion on “secured” loans) Is it a good idea?  The answer is it depends.  The first step is to discuss the terms with the administrator … Continue reading

Did The Mortgage Interest Tax Deductible Feature Survive The New Tax Reform?

Confused about the new Federal Income Tax Law that just went into effect this year? Do you know if the mortgage interest tax-deductible feature will still work for you? What about property tax deductions? Confusion, especially when it comes to our money, can certainly lean toward panic and anxiety. In my opinion, I believe the vast majority of us have no real concern for panic. Check out the video in this article for an excellent overview of the changes as they currently stand. Exclusion of Gain on Sale of Principal Residence. Short answer: If you are getting ready to buy a house; chances are pretty good that you will intend to stay in the home for longer than two years. Should an unforeseen “life event” (job transfer, divorce, etc.) show up before that two years; you may have to pay tax on the amount of gain you could make in … Continue reading

Will you be saving for a house? Why HOW you save matters.

Saving money for a house is important for many reasons other than the obvious that you typically will need a down payment. Some of us may be fortunate enough to have that “rich uncle” with deep pockets to help out. Many will qualify for a low to no down payment loan. However, the vast majority of us need to buckle down and get the money in the bank.   Preparing for a higher housing expense Budget – Ugh! I’ve never come across too many people who love to budget. For most of us, it is a struggle and high on the list of procrastination. IF you are going to buy a house, you really need to get clear on your current budget. Otherwise how will you know what you can afford? For details on how to do this; check out “What can YOU afford?” Once you have determined what you … Continue reading

Should You Payoff Debt Before Buying House?

This is a question I was asked quite frequently during my career as a mortgage loan officer. The easy answer is … it depends. Each of you have a unique financial situation and that means the answer is dependent on several conditions or factors. Here are a few worth considering: Budget, Credit Score, Debt Payoff and Mortgage Insurance. Let’s look at them separately. What works best in your budget? You may be surprised to learn just how little your payment is affected by additional down payment on a mortgage. This over anything else, tends to influence consumers to payoff debt before buying house. Let’s assume you have an extra $5,000 to either pay down a credit card or put toward a down payment on buying a house. You are making interest only payments on the credit card at a rate of 10% and your proposed mortgage would have a rate … Continue reading

How To Start Home Buying Process – The First 5 Steps

When a new client was referred to me (in my former career as a mortgage loan officer); the most popular first question was “How do I start the home buying process?” It can seem odd to have this confusion with all the available information online; but I think that might be the very reason. If you don’t know where to start; how do you sift through all that information to find what should be the first few steps? Here are five easy steps you can take today to move toward your goal of home ownership. #1 How Much Can You Afford? Lenders are your best source for how much of a mortgage you might qualify for; but that is not always what YOU can afford. As much as even the word “budget” can make us groan; you really have to start there. Even as simple as a piece of paper, … Continue reading

What can YOU afford?

Whether it is your first time financing a home or you’ve done it before; the biggest question that most buyers will have is, “ Can I get a home loan?”  It can be an intimidating process but armed with some up front knowledge; it can also be an exciting journey. There is an endless amount of information online about mortgages.  You can easily fall prey to “analysis paralysis.” Information is helpful; but taking the right action with the information is key. My mission is to help you to learn what “right action” to take; to discover your personal target and how to hit it! Typically the first question you may have is “How much can I get approved for?”   The BIGGER question truly is  “What can YOU afford?” It is more important than what the lender may tell you is your maximum loan qualification.  Why?  Simply because you have to … Continue reading