About Home Financing Q & A
Here are several important questions to consider before beginning the process of looking at homes and reviewing your financing options.
Question:
Does my job history play a role in getting a mortgage?
Answer:
Yes. A lender considers you to have steady employment if you have been working consistently for at least the past two years. Even continuous employment does not automatically qualify you for a mortgage. Likewise, a lack of steady employment does not necessarily mean you can't get a mortgage.
The important consideration is whether you can reasonably explain any gaps in your employment history. For example, did you just recently finish school? Were you temporarily laid off? Did illness prevent you from working or were you discharged from the military?
Question:
Can I realistically afford a home?
Answer:
Lenders typically want the buyer to contribute a portion of their own funds toward the purchase of a home. These funds are often referred to as the down payment.
There are many options available to home buyers who need help with down payments. Some mortgage financing requires as little as 3 percent down. How much will you need at closing? Consider a family that wants to purchase a $150,000 home with a required down payment of 5 percent. The down payment would total $7,500. You also have to be prepared to pay closing costs, which can range from 3 percent to 6 percent of the sales price of the home. For a $150,000 home, that would mean $4,500 to $9,000, depending on your down payment.
Question:
How does my existing debt affect my ability to get a mortgage?
Answer:
If you have an unfavorable credit profile, it may mean you do not pay your bills on time or you currently have more credit obligations than you have been able to handle.
If your accurate credit report shows you do not have a good credit history, now may not be the best time to apply for a mortgage loan. Instead, you should try to improve your credit profile by bringing your payments up to date, paying off some of your debts and working on paying your bills on time. You can still build a profile over time that shows you are a good candidate for a loan even if you have had serious credit problems in the past.
There are a variety of non-profit organizations that provide counseling on budgeting and arranging repayment plans.
Question:
Can I afford the monthly mortgage payments on the house I want?
Answer:
From a lender's point of view, your monthly mortgage payment is generally limited to 28 percent of your gross monthly income. The amount of your total monthly debt is limited to 36 percent of your gross monthly income.
Finding a home that stays within these lender guidelines will give you a certain range of monthly mortgage payments you can afford. The amount of these payments will depend on current interest rates.
- NUMBER1EXPERTS™ 
