I always explain to new clients that there are two conversations we must have:
- What CAN you do?
- Then, what SHOULD you do?
In this third step, this means first discussing what you CAN borrow. Or put another way, finding out how much of a mortgage you will qualify for.
Thus, the third step in making the smartest decisions when it comes to borrowing mortgage money is “AVAILABILITY”.
This step describes all of those qualifying questions you must answer when applying for a mortgage loan:
- How much do you make?
- How much down payment do you have?
- How’s your credit?
- What other debts and obligations do you have?
- And so on…
Essentially, it includes all of the information that goes into completing a loan application.
Since the Great Recession in the not-so-distant-past, how much is available to you has definitely been reduced…as it should have been for many homeowners. Gone are the days of not documenting your income. Even better, gone are the days that “greasy” lenders around the country were knowingly putting people into homes (and mortgages) they could never afford in the first place!
The world of availability will come down to your ability to repay the loan…safely and consistently…going forward. That’s what the lenders and investors care about. And really, it’s what you should care about, right? So the world is a safer place for the most part for anyone looking to finance a new home.
Once you have gone through the steps of how much mortgage is AVAILABLE to you for borrowing, only then can you move on to the fourth step…how much SHOULD you borrow? Click the links if you missed the First step or the Second step in borrowing SMART.
By Trevor Hammond