Qualifying for a Mortgage in the Southern Ocean County Real Estate Market NJ

A mortgage is most likely one of the largest financial commitments you will make in your lifetime. Therefore, it is important to understand what you need to qualify for a mortgage and How to Qualify for a Mortgage in the Southern Ocean County Real Estate Market. We can help you find the perfect home in Stafford, Barnegat, LBI, Little Egg Harbor, Waretown or an adult community but first you must have a clear understanding of how much house you can afford.

What a Bank Looks For

Every loan is different and every bank will have their own set of requirements however there are a few key points to understand about How to Qualify for a Mortgage in the Southern Ocean County Real Estate Market:

Debt to Income Ratio: This is one of the first things a bank will look at. A debt to income ratio is simply your total debt (credit cards, loans, car payments, etc) divided by your pre-tax gross income. The resulting percentage shows how much income is available to put towards a mortgage.
Down Payment: The down payment (or the amount of the purchase price you plan to pay for with funds other than the mortgage). The “standard” down payment is 20% of the purchase price however there are many loan products that offer lower down payments.
Private Mortgage Insurance (PMI): For most loans with less than a 20% down payment, private mortgage insurance will be required. PMI is designed to protect the lender (the bank) against default. The premium is paid up front and does not protect the borrower. PMI can go away once 20% of equity is built up in the property.
Interest Rate: The interest rate is the amount charged to you each month based on your principal balance. This is the cost of borrowing money. The interest rate can be fixed or it can be adjustable depending on the loan. This is VERY important as an adjustable rate mortgage may increase substantially if interest rates rise.

Types of Loans in the Southern Ocean County Real Estate Market

There are many types of loans available, some with certain conditions that must be met. A few of the more commons loans are:

Conventional: Generally thought of as a stable loan product conventional loans are very common and offer a fixed interest rate
Adjustable Rate Mortgage: An adjustable rate mortgage or ARM will generally offer a lower interest rate than a conventional loan but the rate can go up or down depending on the market.
Interest Only Loan: An interest only loan pays on the interest due and does not pay down the principal balance. Therefore, an interest only loan will NEVER be paid down unless the borrower elects to make additional payments on the principal balance
VA Loan: A VA loan is administrated by the Veteran’s Association so to qualify for this loan you must have served in the nation’s armed services.

Buying in the Southern Ocean County Real Estate Market

There are some excellent buying opportunities in the Southern Ocean County real estate market but you must first understand How to Qualify for a Mortgage in the Southern Ocean County Real Estate Market before shopping for a home. Without a clear understanding of your personal finances it will be difficult to complete the real estate transaction! We can help you with not only finding the right house for you but also with getting you ready to buy a house in the Southern Ocean County real estate market so please contact us with any questions!