Qualifying for a New Ideal Home - All About Financing
February 28, 2023
Let's Talk About Qualifying for a New Ideal Home.
Are you ready to find your dream home, but you have been trying to time the market? Alex Hawkins, CSolutions Financial Advisor and preferred leader with Ideal Homes & Neighborhoods says you cannot time the market perfectly. The most important thing to do is know your finances so you can best determine the right time to buy.
How do you stay aware of the current interest rates, and how do you know if you qualify for that rate?
Interest rates are based on several varied factors like your credit score, loan type, and the amount of a down payment. When you reach out to a bank, credit union, or mortgage company for a loan, they can give you an estimate based on your debt-to-income ratio and credit score, if you know your actual credit score.
There are fifteen ways to score a credit report. A mortgage company’s credit report is more in-depth and weighs more to assess the risk factor of the loan. Credit report companies such as Credit Karma could potentially score someone 50 to 100 points higher or lower than their actual credit score. That kind of service is best to used to see if someone has pulled your credit or used your credit without your knowledge. Ideal Homes & Neighborhoods preferred lenders, Citywide and CSolutions, offer a “soft pull” report to give them a decent indication of your credit score to be able to pre-qualify you for a loan amount.
This is the first step to understanding how much home you can afford. A soft pull uses a credit scoring system that won't impact your credit score. To find out how much home you pre-qualify for by using the soft-pull credit score, visit here.
When beginning your new home search, how do you determine what you can afford?
First, getting the pre-qualification allows our preferred lenders to determine the pre-qualified loan amount based on your debt-to-income ratio. Your debt-to-income ratio is based on monthly payments going out, not the total balance of your current debt. The amount of money going out of pocket is combined with a possible monthly mortgage payment and it is checked against a percentage of your monthly income.
If you have had imperfect credit in the past, can you still qualify for a home?
The answer is YES! For customers who have experienced bankruptcy, medical bills, or just think they cannot qualify for a new home, this may not be true. There are several types of loans you can apply for if you have filed for bankruptcy in the past, but the loan is based on the type of bankruptcy (Chapter 13 or Chapter 7). Also, the “wait time” to consider after the default is different for conventional loans versus an FHA loan.
Our preferred lenders are able to walk you through your options to understand what is available in your specific situation.
What contributes to the monthly mortgage payment?
It is a combination of the home's cost and the interest rate that makes up the bulk of your monthly payment (PMI, homeowners insurance, and taxes make up the rest of your monthly payment). In many cases, you may be able to afford a higher-priced home if the interest rate is lower. And, for a limited time, Ideal Homes & Neighborhoods will pay to have your interest rate lowered on your home.
Are there financial incentives when working with the preferred lenders and how do they help your monthly payment?
Ideal Homes & Neighborhoods offers financial incentives when using a preferred lender which can lower your monthly payment significantly. Read more about current financing incentives from Ideal Homes & Neighborhoods.
In addition to paying for a lower interest rate for homeowners, Ideal also offers up to $4,000 towards closing costs when using our preferred lender. Preferred lenders offer a quicker turnaround on closing and a personal financial advisor to help guide you. If you are looking to close soon, we have pre-designed homes currently available in multiple locations throughout the Oklahoma City metro.
But if you still have financial repairs to make on your credit, building a custom Ideal home may allow you the time needed to work on your finances while still receiving guidance from a financial advisor like Alex.