There are many options out there that can help you get approved for a bigger home or a bigger mortgage now. You can obtain a mortgage on a 2/1 buy-down program. This will allow you to have an interest rate that is 2% lower for the first year than the final interest rate. After the first year this interest rate will increase by one percent and then after the 2nd year it will increase to its final rate. This program can be good for families that anticipate having income increases within the next year or two. It can also be good for families that have one spouse planning on returning back to work within the next year or so. This way they are able to afford the home they desire now and their income will justify the bigger home when their income increases shortly thereafter.
If at all possible, it is best to begin the loan approval process before you find the home of your dreams. Otherwise, you may hit a roadblock when you apply for a mortgage and the application is denied. If the seller has other buyers waiting, or needs to sell quickly, you may lose your chance for that particular property.
Make sure you have a full approval before making a commitment to purchase the largest home you can afford. A full approval from a reputable mortgage broker, who can offer you numerous options from different lenders is your best bet.
Be careful when buying a home that you will be able to afford the payment. The last thing you want is a foreclosure because you weren't able to make your mortgage payments. Make sure that you are buying a home that matches the payments you are comfortable making. Resist the temptation to buy a home that you won't be able to afford.
If your debt to income ratio is high but you feel you can afford the payment you should consider a " no ratio " loan. No-ratio loans exclude dti restrictions at the expense of a slightly higher interest rate.
Other types of mortgages can help you afford bigger homes. The more common options are to lower your payments by using an Interest Only Feature. Another option for lowering your payments is to get a 40 year term rather than a 30 year term. The other choice is to lower your interest rate by using some type of ARM program such as a Pay Option ARM.
There are many loan programs available to borrowers that will help them get approved for a bigger home. Lenders are offering no ratio and no doc loans which help borrowers overcome the Debt to Income ratio requirements of most lenders. Borrowers can also afford a bigger program if they expect their incomes to rise in the future by utilizing a pay option arm loan which comes with minimum payments based on interest rates as low as 1%.
With an Interest Only loan you will have a lower montly payment because nothing is being paid to the principle amount. This may be a useful feature if you don't plan on being in your home long, or if you expect your salary will be increasing in the future.
Be sure to check the local For Sale By Owner (FSBO) market for homes. Since these sellers do not need to pay a 7% realtor's commission, their pricing may likely be more reasonable. Plus, you my be able to negotiate a better deal by speaking directly to the seller.
Many home buyers pay 1 to 2 discount points to buy down the interest rate permanently. With a lower interest rate, these homeowners can qualify for larger loan amounts given the same income, and thereby are able to buy bigger properties.
There are many loan products that can help you get approved for a bigger home. Usually these loans do not consider your debt to income ratio, or DTI ratio. Others do not document your income, but merely state your income. Contact your mortgage broker to find the loan product that is right for you.
Review your debt situation with your mortgage professional. By eliminating installment and revolving debts, more income can be freed up to afford a larger home. Perhaps a large home, but with lower property taxes may reduce your total costs as well.
Buying a bigger home can be challenging, however today's market presents buyers with strong credit and assets a multitude of opportunities to get a great deal on a their next home. One of your key considerations may be selling your existing home, as the profits from the sale may constitute a large portion of your down payment on the larger property. To ensure a smooth transaction, consider working with a mortgage company who can help you connect prospective buyers with 100%, or no money down financing for buyers with qualifying credit. This allows you to advertise your home more aggressively and quickly evaluate offers, which healps you sellyour old home more quickly and get into your bigger home more quickly as well.