WHAT TO CONSIDER WHEN YOU FINANCE A HOME

Navigating through the mortgage process can be difficult and confusing because there are many factors to consider when obtaining financing for your home. The first thing you’ll need to determine is how much you can spend on your new home, which generally depends on four main factors;
The size of your down payment, your FICO credit score, your debt-to-income ratio, and your monthly maintenance expenses.

Other factors to consider include the deduction of mortgage interest on your federal income taxes, and what type of mortgage product you should obtain. There are many different types of mortgages but they generally fall into two main categories: fixed-rate mortgages, in which the interest rate is fixed for the life of the loan and adjustable-rate mortgages (ARM), which adjusts following the completion of a fixed-rate period (3-10 years on average).

DOWN PAYMENT 
Down payment is the amount of money you already have saved to buy your new house, typically between 5-20 percent of the purchase price of the home. If you are obtaining a conforming loan and putting less than 20 percent down, you may be required to obtain private mortgage insurance (PMI) which protects the lender in case of default. On average you will also need an additional 2-5 percent of the purchase price to cover closing costs and other expenses such as commissions, appraisal fees, mortgage recording fees, transfer taxes, title insurance premiums, etc.

FICO SCORE
Your credit score, or FICO score, is derived from the information found on your credit report as reported by the three major credit bureaus (TransUnion, Equifax and Experian). Each bureau generates a separate FICO score ranging from 350 to 850, and you should review each one before applying for a mortgage.

You can expect to obtain competitive mortgage interest rates if your score is 720 or above, which may allow you to borrow more than you otherwise would have.

DEBT-TO-INCOME RATIO
Your debt-to-income ratio (DTI) is expressed as a percentage and is calculated by taking your monthly debt and dividing it by your gross monthly income. A DTI of less than 36 percent can qualify for most mortgages. The lower your DTI, the more you can potentially borrow for your new home.

MORTGAGE INTEREST DEDUCTION
Another important factor to keep in mind are the rules governing the deduction of mortgage interest on your federal income taxes. For a “qualified home,” the IRS allows an individual to deduct the interest charged on up to $1 million of home acquisition debt used to buy, build or improve a home.

The amount you can deduct from your mortgage interest payment can help you buy more house for your money.

To better understand how to finance a home in Visalia, Tulare or Porterville contact a local mortgage lender. The professional can give you valuable information to help you obtain the best financial package for your family.

Jeremy Engle
Country Club Mortgage 
559.734.5000 Central Valley Phone 
805.544.2775 Central Coast
888.330.2272 fax
Phone Email: jeremy@jeremyengle.com 
400 E. Main St. Suite 120 Visalia, CA 93291  
6795 N. Palm, Suite 101 Fresno CA 93711  
4211 Spring Tree Ln. Bakersfield CA 93314  
1204 Nipomo St. San Luis Obispo CA 93401   
NMLS # 293517 | DRE # 01474957
Apply online 24/7 @ www.jeremyengle.com