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How much mortgage do I qualify for?

The #1 question first time home buyers ask is: How much mortgage do I qualify for?

This is, by far, the wrong question to be asking.  They shouldn’t be basing their purchase price based on what mortgage they qualify for but instead, how much of a mortgage payment are they comfortable with paying every month.

For instance, they may qualify for a $2000.00 per month mortgage payment but that doesn’t mean they should be buying a house with payments that high.  Instead, they should be asking themselves what mortgage payment are they comfortable with paying every month so as not to be “House Poor”.  I usually advise married borrowers to base their mortgage payment based on one borrowers’ income, in the event the other borrower becomes temporarily unemployed.

The current Fannie Mae mortgage underwriting guidelines allow a borrower to obtain a mortgage payment up to 50% of their gross income.  Personally, I think that is crazy and here is why:

Assume you make $48,0000.00 annually.  That means the current guidelines will allow you to have a $2000.00 per month mortgage payment.  So let’s run the numbers and see why a $2000 mortgage payment would not work. If you make $48,000 annually, that breaks down to $4000 per month and after a minimum of 20% income tax, you will take home $3200.  So, use $3200 as your monthly bills starting point.

$3200

-$2000 – Mortgage

-$200 – Health Insurance

-$100 - Car Insurance

-$100 – Phone Bill

-$250 – Utilities (Power/Water/Sewer)

-$100 – Cable

-$200 – Auto Gas

_____________

$250 – left over for livable expenses (Savings, food, entertainment, etc.)

At $250 per month to live off of, you’ll own a big, beautiful home … that you can’t even afford to invite your friends over for the house warming party. Not my idea of a good time. Instead, go in to the home loan process with the idea of how much you want to pay per month. By doing this, you will be more effective in budgeting your money, thus being able to get a home you can afford to buy and comfortably enjoy living in.

The proper question to ask a mortgage company when thinking of buying a house is:

I would like my mortgage payment not to exceed “X” dollar amount per month.  What price range of a home should I consider buying?

For First Time Home Buyers, choosing the right mortgage broker or lender to work with is the key in successful homeownership. Your Loan Officer needs to take into account your short term and long-term goals and help you choose a mortgage payment that you are comfortable with rather than getting a big loan that benefits them only.

I pride myself with the integrity and experience that allows me to help my borrowers obtain a mortgage that best fits their needs and not my pocket.  Give me a call today and let me guide you through the proper home buying experience.

Experience, integrity and customer loyalty is how I’ve been serving Central Florida Homeowners since 2001. I help hundreds of homeowners every year by taking the time to look at their short and long-term goals. I help them customize a mortgage option that best fits their needs. As a consumer advocate and the Principal Broker at Florida Home Funding, my pledge to you is:

  • I work for you, not the banks
  • I put your best interests first
  • I work around your schedule, not banker’s hours
  • I give straightforward answers to all your questions
  • I have more financing options than any bank
  • With access to wholesale mortgage rates, I am confident that there is not a bank in town that can beat my rates

This is how I have maintained an “A+” rating with the Better Business Bureau and have some of the best online reviews. Don’t take my word for it, see for yourself.

Call me and let’s talk about to a mortgage that fits your lifestyle for you to comfortably enjoy for years to come…

When it comes to getting a mortgage

you have more options than you think

#1 mistake when searching “Mortgage Rates Today”

#1 mistake when searching “Mortgage Rates Today”

The #1 mistake consumers make with the widely-searched term “mortgage rates today” is not knowing how to read the fine print and the multiple factors associated with determining accurate mortgage rates. The most deceptive advertised mortgage rates are either missing clear and conspicuous disclosures of the terms or have disclosures that require a very mortgage savvy person to understand.

For instance, some of the biggest online lenders advertise the lowest rate - but only based on very low loan-to-value and includes paying multiple discount points.  The fact is, most consumers don’t want to pay discount points. The cost associated with recuperating points with rates takes a long time to justify the benefits, and some people just don't have the money.  Another thing to consider is that mortgage rates today are subject to multiple criteria: Exact credit score, Loan amount, Loan-to-value, Purchase or refinance transaction, With and without cash out and Type of property.

Here are two categories of the type of companies that advertise mortgage rates to hook customers into completing an application (which eventually results in bait-and-switch tactics):

BIG Mortgage Lenders - The BIG online mortgage lenders with highly recognized names that sponsor the Superbowl and other major sporting events.  When it comes to lowest mortgage rates it’s not like a car dealership that gets better pricing based on volume. Pricing is purely based on overhead and cost of acquisition.  Often times, smaller mortgage brokers undercut these big lenders by a quarter to a half a percent when comparing same closing costs because they don’t have hundreds of employees or million-dollar advertising costs.

Lead generation websites with big brand names:  These websites are very deceptive and unregulated since they are not licensed mortgage companies and will do anything to get consumers to complete a form.  They will advertise 15 year mortgage rates or adjustable mortgage rates with the idea that consumers assume it's a 30 year fixed rate without any discount points. The truth in lending act clearly sets out guidelines mortgage lenders are supposed to follow when advertising rates to consumers.  However, these lead generation websites have zero understanding of the law and have only one goal in mind:  get consumers to complete an application so they can sell your information over and over which will result in you getting slammed with telemarketers.

Do yourself a favor and instead of searching “mortgage rates today”, search for the best local mortgage companies, mortgage lenders or mortgage brokers. Interview them and read their reviews.  Each local market has hundreds of mortgage companies and so there's no reason to try and get a mortgage from an out of state lender that's just a call center full of highly motivated sales people.  Just think about this: Would you invest money with a financial adviser over the phone, or would you rather deal with a local person that you can meet with face to face?

It's your financial future at stake, your social security number and your identity that you're sharing. Make sure you know where your information is going and who you're giving it to.

I’m Shahram Sondi (NMLS id: 186790), principal broker and president of Florida Home Funding, a Florida licensed mortgage broker. As a consumer advocate, I am constantly working to educate consumers on making good financial decisions. I have been serving the Central Florida market with experience and integrity since 2001. Tell me what you’re looking for, and we will personally present you with the lowest available mortgage rate today based on your desired mortgage type and term.

When it comes to getting a mortgage

you have more options than you think

First Time Home Buyer Florida Program Update

There is no magical way for a First time home buyer in Florida to get a mortgage loan to buy his/her first home.  You still have to meet the many criteria for a mortgage that will be securitized in the market and conform to the guidelines set forth by HUD and various regulatory agencies.  Typically, people associate first time home buyer loans with FHA loans. Thus, for the purpose of this first time home buyer update we will focus on providing potential Florida homeowners with qualification requirements pertaining to FHA loans.

Before we go into more detail, here is a simple way to look at how you qualify for a first time home buyer FHA loan:  You either make enough money to qualify for an FHA loan or you don’t.  You either have demonstrated credit worthiness or you haven’t.  It’s as simple as that!

First Time Home Buyer Florida Program FAQs

Here are some basic cost and qualification requirements for a first time home buyer in Florida:

  1. What is the minimum credit score for FHA loans? Although some Florida mortgage companies will go down to a 580 credit score, most lenders require a minimum of 620 credit score to approve an FHA loan.  Minimum FHA credit scores do not automatically qualify you for an FHA loan.  Most mortgage lenders also like to see 1-3 positive tradelines such as credit cards reported on your credit for a at least 12 months.  FHA does allow for nontraditional trade lines such as electric and cable but varies from lender to lender.
  2. How about bankruptcy or foreclosure? No bankruptcy in the last 2 years, no foreclosure, Deed in Lieu or Short Sale in the last 3 years from the date of your Florida mortgage loan application.  Simply put, if you have had a bankruptcy, it had to have been discharged over 2 years ago. A foreclosure had to be completed over 3 years ago from the time the deed transferred from your name to another.  Although there are talks about loosening up the foreclosure guidelines, for now you may want to use this timeline to be safe when evaluating your current circumstances.
  3. How much can you afford? Currently FHA in some cases allows all the way up to 55% debt-to-income ratio for loan income qualification purposes.  What this means is, your total monthly obligation cannot exceed 55% of your gross monthly income.  Preferably no one should want their monthly debt to be more than 41% but unfortunately certain homeowners try to push the envelope because they get emotionally attached to a home.
  4. What’s the minimum down payment for FHA loans? You need to put a minimum of 3.5% Down payment in excess of any closing costs or pre-paids.  This means, don’t assume that putting $7,000 down on a $200,000 home is all you need to become a first time home buyer.  You do have the option of asking the mortgage lender to give you credit from the rate towards closing costs in exchange for taking a higher rate if you have limited funds over the 3.5% down payment.  Some borrowers do qualify for Down Payment Assistant from government agencies which may also be an option.
  5. Can you get help with closing costs on an FHA loan? The seller can contribute up to 6% towards your closing costs but that cannot go toward the 3.5% down payment based on the purchase price of your desired home.  You may also search for a broker or a lender that will give you credit to cover all closing costs.  Here at Florida Home Funding, we always provide our first time home buyers with a no closing cost option.
  6. What’s the Maximum FHA loan amount you can get?  The maximum loan limits are set by your mortgage lender based on your income. In addition, the mortgage lender also has to take into account the Florida Maximum County loan limits set by HUD. For current FHA loan limits in Florida, visit  https://entp.hud.gov/idapp/html/hicostlook.cfm
  7. Do you have to pay anything extra on an FHA loan? All FHA loans have mortgage insurance added to your monthly mortgage payment.  FHA mortgage insurance currently is set to stay on your FHA loan for the life of the loan.  As an alternative, you may want to look at putting 3-5% down on a conventional mortgage, which does not result in lifetime mortgage insurance payments.  Lastly, FHA loans also come with a hefty upfront one-time mortgage insurance premium that is stacked on top of your principal loan amount.  The upfront mortgage insurance is 1.75% of your principal loan amount.

Contact a licensed Florida mortgage broker if you are looking for not only the best FHA loan rates in Florida but also if you would like a professional to sit with you, explain and lay out a successful long or short term strategy (based on HUD guidelines) to help you become a qualified first time home buyer in Florida.

When it comes to getting a mortgage

you have more options than you think

Who is Eligible for a Mortgage?

While most people may think that everyone is at least eligible for a mortgage, this is not necessarily the case. Mortgages have eligibility guidelines, as well as, qualifying guidelines, both of which have different meanings. Many people may be eligible, but they may not qualify. Usually, documentation for proof of eligibility is always required at the beginning of the mortgage process for eligibility purposes.

Eligible Mortgage Borrowers:

  • Individuals with a valid social security number
  • Inter vivos revocable trusts
  • Illinois land trusts
  • Permanent resident aliens
  • Non-permanent resident aliens
  • Non-occupant co-borrowers

Ineligible Mortgage Borrowers:

  • Borrowers without social security numbers
  • Foreign nationals
  • Borrowers with diplomatic immunity
  • Land Trust, except Illinois
  • More than 4 borrowers per transaction

It is always a good idea to bring any proof of identity and eligibility, such as social security cards or permanent resident alien cards, when applying for a mortgage. These documents are needed for anyone who is an applicant for the mortgage. This will assure that the application can move to the next step, which is qualifying for the loan.

When it comes to getting a mortgage

you have more options than you think

Why do some mortgage lenders require cash reserves?

When it comes to mortgages, there are a lot of guidelines that must be followed, all of which must come together in order to receive an approval. For many borrowers, this information is new to them and can be overwhelming. For instance, most people know what a down payment is, but not many know about cash reserves and how much they need to fulfill this requirement.

Cash Reserves

Cash reserves are the amount of cash that a borrower is required to have available over and above the funds that are needed for the down payment, closing costs and prepaid expenses. Reserves, calculated using the note rate, equal the amount for principal, interest, taxes, insurance and any assessments.

Mortgages require cash reserves in order to make sure the borrower has enough funds available just in case an unexpected financial issue comes up or something that may affect the borrowers ability to make the monthly mortgage payment.

What can be considered reserves?

Reserves can include cash in checking or savings accounts or any other liquid asset that can be quickly converted to cash (liquid or near-liquid financial assets). Funds must be able to be readily accessed by withdrawing funds from an account, selling an asset, redeeming vested funds or obtaining a loan secured by the asset from a fund administrator or an insurance company.

How Much Is Needed in Cash Reserves?

Some mortgage lenders will require that at least two months of cash reserves be available. However, this determination is normally performed by Fannie Mae and Freddie Mac automated underwriting systems and may vary depending on the overall information pertaining to the mortgage.

When it comes to getting a mortgage

you have more options than you think

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    Sondi And Associates, Inc. dba Florida Home Funding. NMLS ID: 870878 Location: 390 N Orange Ave #2125, Orlando, FL 32801 | Phone: (407) 704-8729

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