One of the best ways to automatically increase your negotiating power, when placing an offer on a home, is by providing the seller with a Pre-approved Loan Letter. This letter shows what amount you are approved for a mortgage. This also helps you and Maggie once you start looking at homes so that we won't waste time looking at homes you won't be qualified for and you'll be in a strong position to make an offer as soon as you find something you like.

Selecting the best financing package available is as important as finding a home that meets your needs.

There are three factors to consider in determining how much you can afford:

Dwn payment

Most loans require some down payment. If you are able to make a down payment of 25 percent or more, you may qualify for special mortgage programs offered by a variety of lenders.

Ability to qualify for a mortgage

Many lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, should not exceed 28 percent of your gross monthly income. They also expect your total installment debt including the proposed monthly mortgage payment on your new loan, not to exceed 36 percent of your gross monthly income.

In addition to your gross monthly income, lenders review your employment history, stability, and potential for increasing your income. They also evaluate any additional income, such as bonuses, commissions and child support.

They will request a credit report to verify your debt repayment, outstanding debt, and available credit. They will calculate your assets, including checking and savings account balances, CDs, stocks and bonds.

Avoiding any late payments on credit accounts, and limiting your credit purchases, helps keep your credit report in good standing. If you have items on your credit report that could negatively influence your ability to secure a mortgage, be prepared to explain each situation in writing. You should also consider delaying major purchases until after you've moved into your new home.

Closing costs

Closing costs typically range between 2 and 5 percent of your loan amount. These fees are due in cash at the time of closing, or, in some cases, can be included in the loan.

If you would like to learn more about financing options, please contact me or call you local lender.