How Much House Can I Afford?
As your trusted lender, we understand firsthand the excitement and anticipation that comes with purchasing a new home. However, as a potential homebuyer, it's crucial to approach this significant financial investment with a clear understanding of what you can truly afford.What determines your borrowing power?When determining how much house you can afford, your borrowing power hinges on several key factors, such as: Income and Debts: Assess your total household income and current monthly debts. To calculate your debt-to-income (DTI) ratio, which is one measure used to determine your lendability, you can divide the sum of all your monthly debts by your gross monthly income. Various loan programs may require different minimum DTI ratios, which can affect your borrowing power. Credit Score: A strong credit score improves your chances of securing a favorable mortgage rate, ultimately impacting the amount you can borrow. Down Payment: Consider how much you can put down as a down payment. A larger down payment often results in a more affordable monthly mortgage, but we understand that a 20% or greater down payment can feel unattainable, especially to first-time homebuyers. We offer zero to low down payment loan options, as well as down payment assistance programs to help you achieve homeownership. Keep in mind, a lower down payment amount could require private mortgage insurance (PMI), which would be an additional cost to consider. Interest Rates and Loan Terms: Interest rates and loan terms, or the amount of time you have to pay back what you’ve borrowed, significantly influence the overall cost of a mortgage. Why get pre-qualified first?While mortgage calculators are useful tools for estimating what you can afford, they rely primarily on you inputting accurate information. Therefore, before house hunting, we recommend consulting a lender to get pre-qualified for a mortgage. Getting pre-qualified will offer a more comprehensive and firm understanding of your borrowing power.In addition, it offers several other benefits: Realistic budgeting: By obtaining a pre-qualification, you can set a realistic budget for your home search, helping you focus on properties within your financial reach. Gives sellers' confidence: Sellers often prioritize offers from pre-qualified buyers, as they know these individuals are serious and capable of securing financing. Swift decision-making: Armed with a pre-qualification, you can act quickly when you find the right home, helping to avoid delays. Should you purchase a new home at the amount you qualify for?It's important to recognize that the amount you're qualified for is not necessarily what you can comfortably afford. Lenders may qualify you for a larger loan, but you’ll want to consider your lifestyle, future financial goals, and ongoing expenses. Here are some additional costs to keep in mind: Closing costs: Additional fees paid during closing that can include your origination fees, points, appraisal fee, credit report fee, flood certification, pre-paid interest, and more. Typically, these are 2-5% of the home’s purchase price but vary vastly depending on property location and the value of the home you are purchasing. Living expenses: Ensure you can cover not only the mortgage but also everyday living expenses, including utilities, groceries, insurance, and other necessities. Insurance, taxes and fees: Factor in the cost of homeowners insurance, property taxes, and any Homeownership Association (HOA) dues. Planning for the future: Take into account potential life changes such as starting a family, further education, or career shifts. Emergency fund and savings: Always prioritize maintaining an emergency fund and savings for unexpected expenses, routine home maintenance, or future investments. Striking a balance between what you're qualified for and what you can truly afford is important. Remember, a thoughtful and informed approach to determining your home affordability will set the stage for a stable and financially sound homeownership journey. Content provided by TowneBank Mortgage for informational purposes only. The information contained herein (including but not limited to any description of lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend. TowneBank Mortgage NMLS# # 512138. Equal Housing Lender
10 Steps To Homeownership
Buying a home should be an exciting milestone! But if you’re a first-time homebuyer, or even if you’ve bought a home in the past, it’s easy to feel overwhelmed by the entire process. That’s why we sat down with loan officer Chace Cooper, to give you a break down on exactly what happens throughout each step of the homebuying process. Obtaining a mortgage is a sophisticated process, so it's never too early to start preparing. Step 1- Credit Check: Credit is one of the most important mortgage qualifications, so you should check it early on to ensure that all the information on your report is accurate and your score is high enough to qualify. Checking your credit early on will give you enough time to get your score back on track if needed. The last thing you want to do is find a house that you love and then realize your credit isn’t high enough to qualify for a loan. Even if you don’t plan on buying in the near future, it’s never too early to meet with a local loan officer and determine how to best prepare for the homeownership process. Step 2- Pre-Approval: You’ve probably heard about the importance of pre-approval. Getting a pre-approval not only helps you to figure out what you can afford, but it also jumpstarts the mortgage process by requiring you to gather necessary documents upfront. Pre-approval can help to save a lot of time in the long run and helps to make for a smoother process. Step 3- Application/Processing: In many cases your loan officer can begin processing your loan application before you even have a contract accepted on a home. Documents needed during the application process include: Current employment information (length with current employer, position/title) Income (W-2s, pensions, SS, public assistance, child support, alimony) Assets (Bank accounts, real property, investments, gifted funds) Debts (mortgage, liens, alimony, child support, car loans, credit cards, real property) Credit history By law, the loan process requires a lot of documentation, but keep in mind that your loan officer is not going to ask for any documents that we don’t absolutely need,” Chace said. Now that your information has been verified and you know exactly what you can afford, it’s time to meet with a Real Estate Agent and find a home you love! Step 4- Loan Document Signature: Once your offer has been accepted by the seller, your loan officer will prepare address specific loan documents. You will receive and sign a Loan Estimate, which gives you your estimated interest rate, monthly payment, and closing costs for the loan that you and your loan officer picked out. Step 5- Appraisal Order and Homeowner’s Insurance: After the home has been inspected, your lender will order an appraisal on your home, which will determine the property value. At this time, you will also need to obtain a quote for their homeowners’ insurance (and flood insurance if needed) and send it to their loan officer for review. Step 6- Underwriting: Once all the requested pre-underwriting items have been submitted and the appraisal is ordered, the loan is submitted to underwriting for review. The underwriter will evaluate all of the documentation and ensure that you are qualified to repay the loan and all government requirements are satisfied. When you use us as your lender, your underwriting is done in-house and typically takes around 48 hours. Step 7- Underwriting Conditions: More likely than not, additional items are needed for final approval. Asking for documents shouldn’t be a cause for concern and doesn’t mean you’re not on track for approval. Because every borrower has a different financial situation, there is no way to determine exactly what documents are needed for final approval, meaning each borrower must submit supporting documents specific to their situation. Step 8- Clear to Close: Once you’ve been officially approved, the closing department will work on preparing the final paperwork with your attorney or title company. Step 9- Closing Disclosure: A closing disclosure is emailed for your signature at least 3 business days before you close on your home. This document will provide the final details on your loan and outline exactly how much money you will need to bring to the final table. If you are bringing money to closing, you will then contact your attorney’s office or title company for instructions on how to send the money. Step 10- Closing Day: This is the day you will receive the keys to your new home! You will be provided with further instructions, but generally you will need to bring two forms of government ID! So, how long can you expect the process to take? It can take as little as 15 days if the borrower has provided all the information upfront, as providing all the needed documents upfront can really expedite the process. On average, however, the process takes about 30 days and in some circumstances, it can take up to 45 days. It just depends on the borrower. No two borrowers are the same. Content provided by TowneBank Mortgage for informational purposes only. The information contained herein (including but not limited to any description of lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend. TowneBank Mortgage NMLS# # 512138. Equal Housing Lender
With Rising Inflation, Here's How To Save On Holiday Shopping
The most wonderful time of the year is here yet again. Spreading joy with presents and gifts for family and loved ones is part of what makes the holiday season so special. But it's not always easy on our bank accounts. Rising prices brought on by inflation may influence you to shop earlier and spend less money than in previous years.So how can you cut back and still spread cheer this holiday season? Here are a few tips that can help:First things first, get into the holiday spirit - The point of a budget isn’t to ruin your holiday fun. After all, the holidays are all about slowing down and spending quality time with the ones you love. Don’t stress about finding the perfect gift for everyone on your list. Instead, put some time and thought into how you can help make their holidays memorable, whether it’s surprising a relative by coming home for the holidays or reestablishing an old holiday tradition.Set a limit for your holiday spending - Never spend money that you don’t have available to you, or that should be designated toward paying bills. Start by making a list of everyone that you need to shop for this holiday season—including co-workers, clients, your children’s teachers, etc. Next, pick a dollar limit you’d like to stick with for everyone on your list. If money is tight this year, consider marking some people on this list as “card only” or homemade gifts, such as a holiday pie or a handmade ornament.For a stress-free shopping experience, the earlier you start, the better. You’ll have more time to research deals and shop around, and you’ll feel less pressure to get your shopping done. Give the gift of time - Not all presents need to have a monetary amount. Giving the gift of time or support to a loved one during the holidays can be just as important. Volunteer to help mom make Christmas cookies or help your brother wrap presents for his kids.Compromise on other aspects of your budget - Like mentioned earlier, you should never spend money that you don’t already have in your bank account. You can, however, cut back on other aspects of your regular spending, such as your own clothing, food, and drink or recreational spending to make room for your holiday spending.Make it meaningful - While electronics or designer clothes are always a fun gift, they don’t have as much meaning behind them. A meaningful gift is something that the recipient will cherish and hold onto- like a framed photograph or a family heirloom. Do your research - There are plenty of deals to be had this holiday season. Research different stores to help find the lowest price on your gifts, and don’t be pressured into buying something that’s not on your list just because it’s on sale.Save your receipts - See if you are sticking to your budget by saving all your receipts and reviewing them once you’re done shopping. Save your receipts for next year to give yourself an idea of how much you spent the previous year, then adjust your budget or your shopping habits based on that amount. Lastly, don’t forget to budget for other holiday expenses, such as food and drink, transportation costs, gift wrap and cards, etc.We wish you a happy and safe holiday season! Content provided by TowneBank Mortgage for informational purposes only. The information contained herein (including but not limited to any description of lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend. TowneBank Mortgage NMLS# # 512138. Equal Housing Lender
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