Dear Homebuyers,
After months or maybe years of donating your hard earned money to the "I want to make my Landlord very wealthy because I just love giving away my hard earned money for free" Foundation,you decide that you want to stop giving away your hard earned money and finally become a homeowner- Congratulations to you. ( We are going to party like its 1999 once you settle in your new home ) I thought my kids were going to graduate from Grad school before you buy a home. ( I have no kids by the way )But before you start your home buying process,there is one thing that I need for to do for me. Pre-qualify yourself before you apply for a loan.
You need to do a debt to income ratio which is the ratio of a borrower's total of debt as a percentage of their gross income. Nobody knows your expenses better than you. You make the money and you know how much of it you spend on bills. Home buyers you simply need to create a chart similiar to this before you get preapprove for a loan.
INCOME
Monthly Income ( Take home )-
Salary/Wages -
Social Security-
Military Pay-
Pension/Retirement Income-
Bank and Investment Interest-
Alimony/Child Support-
Rental Income-
Unemployment-
Food stamps-
Royalties-
Business Income ( Draw )-
Other-
Total Income-
DEBT
Outstanding Debt Payments ( Monthly )-
Credit Card Payments -
Student Loans-
Car Payments-
Recreational Vehicle/Boat Payments-
Bank/Credit Union/Loan Payments-
Furniture and Appliance Payments-
Other Credit Loans or Accounts -
Other Debt Payments-
Debt to Income Ratio ( Calculated )
Monthly Debt Payment -
( divided by )
Monthly Income-
( Equals )
Debt to Income Ratio -
Creditors say that a debt to income ratio of 35% or higher is a higher credit risk. 20-35% is questionable credit,10-20% -Good credit risk and less than 10% is great shape.
Real Estate Professionals need to tell all of our clients during our first contact with our home buyers that they should add at least an additional 50% to their current rental income budget. Additional money will cover additional expenses that a lot of first time home buyers fail to calculate into their monthly mortgage payments such as property taxes,water,gas,electricity,home maintainance,and home insurance and other home expenses until they pay their first mortgage payment.
One thing that we as Real Estate Professionals need to educate our clients more. And that means more than just accept a preapproval letter from some lending institution called "John and Jill loves Dollar,Dollar bills"only to find out that the company folded months ago and I didn't bother to verify the information of the preapproval letter. Most preapproval letters now are outdated not even after a month now but a week. We need to restore the trust of home buyers and sellers in a time when they really need our help.
To receive your free list of "Houses for sale in Washington DC",please give me a call at your earliest convenience. I can be reached at 202-378-0283 ( Direct ) or ( 301 ) 560-6700x1154 ( Office ). I can also be reached online on my websites www.buyandsellnewhomes.com and www.freelistofhomesforsale.com. Thank you very much. Looking forward to working with you and helping you make your home purchase a stress free and very happy one. Lanre Folayan -Real Estate Professional with Exit Premier Realty. "Buy and sell a home in Washington,DC"
Lisa- That's why we spend $102 for every $100 dollars we make. Unbelievable. Thanks for your comments.
Angela -Thank you Angela! We need to storm places and drag out the home buyers hiding. Its okay homebuyers. You can come out and play buy. Thanks for your comments.
Elizabeth-Thanks Liz. This can be a good reason why a lot of home owners have lost and going to lose their homeowners. We just need to do more in educating our clients. Thanks for your comments.
Kathy- Absolutely. It is our job to educate them. Something most of us real estate professionals aren't doing anymore. Thanks for your comments.
Don-Very important part. Everybody who wants to buy a house are not financially capable to buy a home.
Bart-Most home buyers don't even know that. My people perish because of lack of knowledge. Thanks for your comments.
Good post. I think that it is definitely necessary for prospective homeowners to realize that there are actually differences between both of these concepts. I myself was quite confused until I started to research more and more on the issue prior to getting a loan for my first home. I think that you did a great job of explaining each of these simply and concisely.
I also found that this article helped me better understand what I needed to know regarding preapproval and prequalification:
http://www.bankapedia.com/mortgage-encyclopedia/faqs/684-what-is-the-difference-between-being-prequalified-and-preapproved
DW-Thank youvery much. Happy Holidays to you.