Did you lose your home during the real estate crash? Has it been four or seven years since? Are you now feeling confident that you can come back to owning a home again or are feeling unsure & hesitant.
Knowledge is power that sets you to action so here are some information to help you get to a more steady footing & confidence. Are you able to enter the home-buying market again or maybe wait a bit more?
1.) The one thing that didn’t change after all that’s happened in real estate is that lenders still do look at credit rating or score. Then & now, it would do you good if you have a very good score, like 700 & above, as this affords you better interest rates. You know that translates to dollar savings.
You also have to be able to show good employment, rental history & low debt to income ratio. So if you’re planning on buying a home again soon you’ll be wise to hold steady your job, pay your creditors & landlord on time & keep those credit card balances low.
2.) If you’ve had conventional loan when you lost your home, there is the 4 and 7 year rules waiting time; four for short sale & seven for foreclosure. BUT, if you lost your home due to circumstances beyond your control like the death of a breadwinner, a major health problem that prevented your employment, or loss of a job due to downsizing or a company going out of business, AND you are now able to provide good credit rating, employment, like I mentioned in bullet point 1, some lenders may make an exception & might extend mortgage to you.
3.) Some cold hard cash is still necessary for downpayment & closing cost, unless you’re a veteran availing of the VA loan. FHA loans can be obtained with a minimum 3.5% downpayment. Despite a sellers’ market, I still see some closing costs being paid by sellers.
4.) Now if you’re feeling confident, you’re heart is pumping & you’re still reading, I think you just need a little help to come back to the home-buying arena. So much has changed since the housing bubble burst, most important of them is the mortgage pre-approval process. No longer is it called a pre-qualification. Documentation is the word. Pre-approval calls for the same documentation required to actually approve the home loan. Expect that you’ll be asked to present verification of your income, your assets, and your debts. You may also have to present proof that you’re paying your rent on time & tenure in your employment.
This mortgage pre-approval has become a necessity nowadays. Real estate professionals & sellers need to see this if they want to take you seriously.