Do You Qualify For A Mortgage For Your Salem Oregon Real Estate?
Although the housing market has been unpredictable in recent months, the existence of a seller’s market and the availability of low interest rates are providing incentives for potential buyers. However, obtaining a mortgage, especially one which is attractive to you, is not as easy as it was a few years ago. As a result of the extreme increase in the number of foreclosures, banks have raised their lending standards for all borrowers. This tight credit situation affects would-be buyers of Salem Oregon real estate in numerous ways, among them down payments, credit scores, documentation, debt-to-income ratio, and appraisals.
1. Down payments: To get the best interest rate you need to put down at least 20% of the purchase price of the Salem Oregon real estate. FHA loans are available for a down payment of 3% to 5%, but these loans will include additional costs for insurance and a slightly higher interest rate.
2. Credit scores: You will most likely need a score of 730 for the best rates, whereas the average score for FHA borrowers is about 690. Financial advisors strongly urge you to obtain a copy of your credit report six months before loan shopping. Go online for your free credit report from each of the three bureaus and examine it carefully to detect any errors/misinformation.
3. Documentation: Be prepared! Lenders will ask for a great deal of documentation regarding your salary, savings, job stability, debts, and the like. You will need to provide pay stubs for the past 30 days; W-2 forms for the past two years; bank, retirement, and investment account statements; and a listing of debts and monthly expenses. If you are self-employed, you will also have to submit two years of tax returns and possibly a profit-loss statement.
4. Debt-to-income ratio: This ratio compares the gross amount of money you earn to the amount you owe to creditors (mortgage payment, car loans, credit card payments, etc.). Monthly housing expenses should not exceed 28% of your gross monthly income, and total debt should be less than 36% of that amount, the lower the number, the better. To figure your own ratio, use an online calculator.
5. Appraisals: Lenders today want a thorough inspection of both the interior and exterior or your Salem Oregon real estate, and the less money put down, the more extensive the scrutiny of the home’s market value. It is wise to include an appraisal contingency in your offer so that your earnest money deposit will be returned to you if the appraisal fails to meet the negotiated price. How can you find the best rates? Check out this free site that updates available interest rates daily and discloses the best “par rate” in your area.
Dewey and Dave Whitton are Salem’s Relocation Experts and understand that moving is both an exciting and stressful process. That’s why they do everything in their power not only to help you find the perfect home but also make you feel right at home.
Dewey and Dave assist buyers looking for Salem Oregon real estate for sale and aggressively market Salem Oregon homes for sale. Be sure to Download your free guide to Salem and learn everything you need to know about making Salem, Oregon, your new hometown.