The Main Steps One Should Take When Thinking About Buying a Home:
Meet with a Home Ownership Advisor at a local agency. They will help you
Review your credit report and determine the steps needed to clear any outstanding credit issues
Develop a sustainable budget
Develop and start a savings plan (First Home Club?)
Learn about the responsibilities of homeownership
Learn about the various mortgage financing options for “first-time” homebuyers. Ex. State of New York Mortgage Agency (SONYMA)
Learn about grants available in the area
Learn how to select the professionals who will assist you throughout the process: Bank, loan originator, realtor, inspector, attorney etc...
Once you are ready go visit these professionals and start your search for a home!
AGENCIES THAT PROVIDE FREE PRE-PURCHASE COUNSELING
Albany County Rural Housing Alliance, Inc.
100 Cayuga Plaza, Cohoes
24 Martin Road, Voorheesville
Faith Plaza Route 9W, Ravena
Affordable Housing Partnership
255 Orange St., Albany
Better Neighborhoods, Inc.
986 Albany St., Schenectady
Housing Resources of Columbia County
605 State St., Hudson
TRIP Neighborworks ©Homeownership Center
251 River St., Troy
United Tenants of Albany
33 Clinton Ave., Albany
What Lenders Look For in a Mortgage Application
Unless you have a large sum of money for a down payment and plenty of good credit, getting a mortgage will probably not be as easy as simply filling out an application. Here are some things you can do to increase your chances of successfully obtaining a mortgage:
To begin with, it is helpful to know how your mortgage will be processed. After you apply for a mortgage, your application is reviewed by an underwriter. An underwriter is an employee of the lender (bank, Mortgage Company, etc.) whose specific job is to review mortgage applications and determine who is qualified to obtain a mortgage. In order to make this determination, the underwriter uses set guidelines. While guidelines may vary from lender to lender, the basic criteria on which your application will be judged are the same.
JOB STABILITY – Generally lenders look for at least two years of employment at the same job or within the same line of work. If you leave a job for a higher paying one in the same field of work, this is viewed favorably. If you are a “job hopper” the lender is likely to be cautious in giving you a mortgage. Quite simply, the bank knows that the more stable your employment is, the more likely you will be to repay your mortgage.
INCOME – Obviously, you have to earn enough to be able to make mortgage payments. But how do lenders determine who makes enough to buy a house and who does not? Answer: There is a set percentage for how much of your income can be spent on housing expenses and how much can be spent on housing expenses plus all personal debts. (For example, a bank may require that you spend no more than 28% of your gross monthly income on housing expenses and no more than 36% on housing expenses plus all other personal debts.) The higher the percentage, the more you will be able to borrow.
DEBTS – The lender is going to ask you for a listing of all your personal debts and how much you pay on them each month. Examples of personal debts include car loans, student loans, personal loans and credit card debts. If your debts are high, the amount of money you will be able to borrow to buy a house will be reduced. (A good general guideline is that your personal debt obligations should not exceed 10% – 15% of take-home (or net) pay. Take note: it is usually not a good idea to take on a major debt (such as a new car payment) before purchasing your home. Try to wait until after you have purchased your home.
CREDIT – Besides looking at your current debts, the lender will also check your past credit performance by ordering a credit report. A credit report will show who has extended credit to you in the past, how promptly you pay your bills and the most recent report of how much you owe. It will also show bankruptcies, court judgments and if you have any accounts in collection. If you have promptly paid your bills and have not overextended your credit, your report makes the lender feel confident that you will make your mortgage payments on time. However, if you have any accounts currently in collection or court judgments against you, you will most certainly be unable to obtain a mortgage. At the time of application, be prepared to provide the lender with information about all your credit accounts as well as reasons for any problems they may find on your credit report (such as late payments.) If you are interested in ordering a copy of your credit report before applying for a mortgage, it is easy to do. This is a good idea since it will provide you with the opportunity to correct any credit problems or reporting discrepancies before you apply for a mortgage.
CASH AVAILABLE TO PURCHASE – When you apply for a mortgage, it is not good enough to just tell the lender that you have enough money to cover your down payment and closing costs. Evidence of necessary cash in a bank account will be required. At the time of application, be prepared to supply the lender with account information for all of your bank accounts. The lender will then verify this information.