How Much Do I Qualify For?

For most of us, our home is the single biggest investment we have. That is where most of our equity is and that is where our future retirement resources are.
The type of mortgage that we obtain to purchase our home plays a very important role in the way equity builds up for our future.

Before spending hours driving around looking at properties, you should get together with a loan officer and go over your particulars and get verbally pre qualified. A competent loan officer should be able to pre qualify you within about 20 minutes or so. Follow that up by supplying all the documentation they require to get fully pre qualified for the type of home mortgage that you are interested in.

To learn more about the choices you have, go to Which Mortgage Program to Choose page.

Qualifying for a Mortgage

There are two criteria that lenders use to determine the size of mortgage that you are qualified for.

1- Your total monthly housing expense, consisting of: principal and interest payments on you mortgage, also known as PI; Taxes and insurance. These total payments are called PITI. This should not exceed 33% of your income.
2- Your monthly housing expense plus all other long term and revolving debt payments. This should not exceed 42%.
In our mortgage calculator page you will find a series of calculators that will help you with your mortgage qualifying calculations.
Four specific factors are used to determine eligibility, these factors are:

A- Income – This includes all your monthly income gross of taxes. Depending on the mortgage loan program you may or may not have to prove your income.

B- Credit History – This includes your payment history, total outstanding debt, highest balance and any other liens that may have been filed against you. A credit score is automatically generated based on the above information to assist in the decision making process.

C- Assets – Including cash in the bank, all other liquid assets and retirement plan balances.

D- Property – The home you are planning on buying will be appraised and it should have enough value to support the loan amount. It is worth noting that the appraisal must come in at least at the purchase price. Should the property apprise for more that you are paying for, you will NOT be qualified for a higher loan amount.

Our comprehensive free mortgage calculator page will guide you through the entire mortgage loan process.
 

- If a person selects reverse mortgage as a borrowing option then he remains the owner of the property and is responsible for paying property taxes and homeowner insurance and also for conducting home repairs. You can visit this page to get all the information relating to reverse mortgages and also discuss other issues that are currently important to be aware of from a investors point of view.