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If you are planning on purchasing a home soon, before you head out to look at properties, you should first talk with a mortgage consultant or loan officer. Why? As the bank or lender representative, she will determine just how much of a mortgage loan you will be able to afford.
So how is the amount determined?
- Credit: The loan officer looks at your credit history and evaluates the likelihood of you paying back the money they will lend you. So, how reliable have you been at paying back loans? Have you maxed out your credit cards? These type of factors determine your credit score and the higher the score, the better here.
- Debt Ratio: Another factor lenders look at is your current debt-to-income ratio. This is your fixed monthly expenses plus the mortgage payments compared to your gross monthly income. The lower the percentage, the better.
For example if your fixed expenses are $200
and your mortgage payments will be $900
and your gross monthly income is $4000,
your debt to income ratio is 28%.
Calculation: 200 + 900 = 1100 ÷ 4000 = 28%
- Employment and Assets: Employment history and having funds available for a down payment are also factored into the equation. Lenders will want to verify your past two years of work as well as, ensure your bank account has available funds to use for your down payment.
Your mortgage consultant will go over all this with you, explain the different mortgage options available and help find the one best suited for you.
Once armed with this information, you will be ready to look at properties that fall within your parameters. Getting preapproved for a loan will save you countless hours that might have otherwise been spent looking at homes that did not fit your budget.
As the nation's leading retail mortgage lender, Wells Fargo provides you:
• Competitive rates and fees
• An extensive product line
• Prompt communication
• Service that continues after your loan closes
Pam Clements, a Wells Fargo Home Mortgage Consultant, will work with you every step of the way. Start the financing process with a free consultation. Call Pam today!
Preferred Financial Partner
Home Mortgage Consultant
Fax: 1-866-676-1104 2180 Satellite Blvd
Duluth, GA 30097
NMLSR ID 450303