Mortgages Made Simple with Rick Gundzik

Thursday, July 2, 2009
Purchasing a Home - July 2, 2009
We're making a few changes to our blog to better serve all of you. We're going to be moving toward a more text based blog. And we'll also be increasing the number of weekly posts as we're getting a new sponsor. Mortgages Made Simple logo

Today we are starting a "Purchasing a Home" series and what things to consider now that so many things have changed in the real estate industry. We'll cover qualifying for a loan with the new guidelines, appraisal issues, credit score requirements and many other issues.

The podcast version will contain much more wit but if you find it more convenient to read our blog you'll receive all the main points we want you to grasp to navigate your way through the mortgage market.

The first major change over the past year has been the elimination of "stated income" loans or "liar loans" as people not familiar with the mortgage industry call them. When these loans first became available that I remember was in the early 1990's, they served a useful purpose; they allowed people with excellent credit to obtain a loan quickly and easily. There was no need to get tax returns, w2's and paystubs. We asked the borrower how much money they made and we believed them. We didn't increase their income if it was too low, we simply told them to buy a cheaper house they could qualify for. Unfortunately, the subprime industry changed that mindset.

Now if you're self employed and write-off a lot of your income, you will have a hard time getting a loan today. So if you're planning to buy a home in the future, you must claim your income on your tax returns.

To qualify for a loan make sure your house payment is no more that 1/3 of your income. The house payment includes your taxes and homeowner's insurance or HOA dues if you're buying a condo. This is a real conservative rule-of-thumb but it's easy to calculate quickly. If you find that this qualifies you for too small of a loan, give us a call and we can fully pre-approve you for a loan. Here is a handy calculator to help you out.

Join us next time in our "Purchasing a Home" series for credit score requirements.




If you have any questions you would like us to answer on our show, please call our listener line at 714-519-7833 or email mortgagepodcast@gmail.com.

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