The Basics to Real Estate Financing

There are three main items that the bank is going to want to talk about before they dig in and spend any unnecessary time with you.

1. Your credit score - If you have a score below 670, Do not pass Go. Do not collect $200. If your score is below 700 you may only be eligible for a select few types of loans. A score of 740 or higher is winning! You should be eligible for the best interest rates available.

2. Your income over the past two years.  The bank will want to see your tax returns from the past two years. They will then average those years to come up with an amount they consider your annual income. Haven't done your taxes? Go do your taxes and come back when they are done.

3. Your debt to income ratio - Current lending allows a debt-to-income ratio of 40/60. The debts they include in this calculation are revolving debts aka credit cards, student loans, car loans, etc. You'll need to have room for around $600/month per $100,000 of purchase price. The lender is going to see all of your recorded debt when they pull your credit report. To estimate on your own: here's an online calculator.

Once you have successfully provided the above information to a lender they can pre-approve you for a loan that you can reasonably afford. They will provide you with a letter of pre-approval that we'll send along with any offers. With that letter in hand you can confidently search for your new home.

 

 

 

 

 

Ada Faye Dudenhoeffer

Ada Faye Dudenhoeffer is an Asheville native Realtor who specializes in residential real estate. Ada has worked with both buyers and sellers in the Asheville market since 2009. She comes from an Arts and Marketing background with a BFA from UNC Chapel Hill and over a decade working with artists to support the promotion and sale of authentic handmade items. She also brings a lifelong love of gardening, easy going charm, and a quick wit to the real estate office.