This week I will answer several question regarding the mortgage process.I stress it is VITAL that you work with a qualified Banker or Mortgage Specialist. This blog post is just a brief overview. Those wishing to purchase a home in Aventura, I am hoping will find this article of interest.
So off we go....
What is a debt-to-income ratio? And why is this important to me?
Debt -to-income ratio is the percentage of a person's monthly income, their earnings that are used to pay off all debt obligations.
Why is this critical to securing a mortgage? Well, simply put, this is one of the methods the bank uses to assess whether you can repay a loan (mortgage) on a property you plan on purchasing in Aventura, Florida or other areas of the country.
I have heard of obtaining a Pre-Qualification letter and a Pre-Approval for a loan... what is the difference?
If you're prequalified, it means that you POTENTIALLY could get a loan for the amount you request, assuming that all of the information you provide to the Bank is accurate and true. This is NOT as strong as a Pre-Approval. It is a step in the process.
On the other hand, if you are Pre-Approved, it means that you have undergone the extensive financial background check, which includes looking at your credit history, previous tax returns and verifying your employment - and the lender is willing to give you a loan, in a nutshell, this means you have been approved for a loan( mortgage).
The bank will usually provide you with an accurate figure which shows the maximum amount that you are approved to borrow.
Most sellers prefer buyers that have been Preapproved because they know that there will not be any problems with the buyer financing the purchase of their home.
If I can be of assistance if any of your real estate needs, I welcome the opportunity of working with you.