What the “fiscal cliff” means for housing…
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The U.S. economy gets a little homier: Recovery in housing market helping to lift growth late in 2012
For the first time in six years, the residential market is expected to add to U.S. economic growth in 2012. New home sales are up 28% from a year ago and new construction is running 35% higher.
The long-awaited recovery in the devastated real-estate market was a long time coming, but it finally looks like it’s here to stay. Barring another recession, most economists expect sales and construction to continue to rise steadily over the next few years.
And that’s good for the U.S. given the widespread — though diminished — impact that the industry has on the broader economy.
The government this week will release the latest monthly report on new home sales as well as growth figures for the third quarter. Both are expected to show improvement, with housing contributing significantly to gross domestic product. (continue reading)
We’re now offering our LOWEST interest rate ever with a 2.875% on a 30 year conventional fixed rate!!! Before taking advantage of this wonderful opportunity, check out this “how-to” guide that breaks down mortgage qualification. Additionally, consult with an M/I Financial advisor to answer your questions and help decide what’s right for you.
Well before you start drooling over home listings, you need to know how much home you can afford to buy. When you take the time to determine an appropriate mortgage amount, you’ll avoid looking at homes you can’t pay for, or worse yet, bidding on them.
What can you afford to pay for a house?
First, start by making a budget if you don’t already have one. Be honest with yourself about the amount you can reasonably spend each month on your housing. Be sure to factor in taxes, insurance premiums, maintenance and other upkeep required when you own a home. No calling the landlord to fix that broken hot water heater when you own the house! You should also consider your other financial obligations and how they play into your ability to pay for a mortgage.
With excellent credit, you may find that you qualify for a substantial loan, but you need to remain realistic with yourself about your current financial situation – don’t count on a pay raise that may not come through, and don’t tell yourself that you can scrimp each month in order to make your mortgage payments.
Checking your credit history is key
Your FICO score, also known as your credit score, tells lenders whether you are a worthy risk. The number is an indicator of whether you pay bills on time and whether you have outstanding debt.
Check your credit report through www.annualcreditreport.com to request your FICO score, and then get to work disputing any incorrect information with your existing or previous lenders.
If your score is low, your home loan application may be rejected. Even if it’s accepted, you may be required to make a larger down payment or pay a higher interest rate on the loan.
The difference between pre-approval and pre-qualification
Pre-qualification is the first step in the mortgage purchase. Before showing you properties, your real estate agent will likely ask you for a pre-qualification letter. The process to obtain one is straightforward: Over the phone or online, you supply your lender with information about your financial situation, including your income, assets and debt. The lender will evaluate this info and provide a ballpark figure of the mortgage amount for which you could qualify, in addition to discussing your mortgage options. This service is usually free.
Your pre-qualification doesn’t guarantee how much the bank will lend you. It also doesn’t include analysis of your credit report or deep scrutiny of your ability to pay for a home.
Pre-approval, on the other hand, is much more involved. After completing a mortgage application (which generally includes an accompanying fee), you will give the lender the go-ahead to perform extensive research into your financial history and credit score. The lender will then tell you the precise amount that it is willing to loan to you, so you will be able to begin looking for homes at or below that price. Again, you should also take into account your budget as you choose a home. A pre-approval doesn’t guarantee that you can make the corresponding mortgage payments, so you should do the math beforehand.
Completing both steps shows sellers that you are a serious buyer. When you make an offer, you will more quickly be able to obtain a mortgage, thereby reducing your chances of potentially losing out to another buyer.
After you have found the home you wish to purchase, you will update your pre-approval with the relevant details, and your application will be complete.
The last step: loan commitments
Once the lender has approved you and the house you’d like to purchase, your income and credit rating will be checked once more to make sure that it hasn’t changed since the pre-approval. A loan commitment is issued when the bank is certain it will lend.
Taking a hard look at your financial situation will go a long way toward helping you choose the home that is right for you. With a firm understanding of what you can afford and pre-approval from your lender, you will be well on your way to choosing the perfect home for you and your family.
source: National Association of REALTORS®