Buyer Homework

Steps:

Sign representation documents allowing Dan Wood to represent you. It's now illegal to show homes in person or virtually without signing representation documents. Meaning, Dan can't even email you homes, unless he is representing you, officially, in writing.
- This is now a nationwide law. Click here for more info
- No advice will be given to you, unless you are being represented and have signed representation documents.
- No homes will be emailed to you or shown in person, unless you are being represented and have signed representation documents
- Explain the house criteria you are searching for and a custom search will be created, after representation documents have been signed by all parties, buyer's and real estate agent
Get approved for a mortgage. Click here to get started
- See the picture below. There is a major difference from being "prequalified" vs. "preapproved"
Opt out. Unless, you want random offers.
- Get protected and opt out here: www.optoutprescreen.com
- Under the Fair Credit Reporting Act (FCRA), the Consumer Credit Reporting Companies are permitted to include your name on lists used by creditors or insurers to make firm offers of credit or insurance that are not initiated by you ("Firm Offers"). The FCRA also provides you the right to "Opt-Out", which prevents Consumer Credit Reporting Companies from providing your credit file information for Firm Offers.

If you haven't already met with Dan to officially go over a buyer consultation, sign up today:

How much money do you need:

What loan is right for you:

FHA Loan Limits:

What's your Credit Score:

Analyzing Debt-to-Income Ratios (DTI)

An important metric for clients in both getting approval for a mortgage and ensuring that they can also still afford to maintain a reasonable lifestyle is their DTI, which is a way for lenders to assess an applicant’s overall financial health and ability to manage debt. In fact, as noted in Figure 1.2 earlier in this module, DTI is the most frequent reason (48%) lenders reject mortgage applications. Some mortgage and financial experts consider this such a critical metric that in 2023, the Federal Housing Administration (FHA) was planning to implement an additional upfront fee for borrowers with a DTI above 40%, but after pushback from industry insiders and lobbying groups, the fee was ultimately scrapped.5 In short, it’s helpful for clients to have a general idea of their DTI as early in the homebuying process as possible.

Below is a general rubric to evaluate DTI. Different banks will have marginally different cut-offs for each level, but the following ratio levels provide a good sense of how lenders generally evaluate mortgage applicants based on DTI.

Over 50%:

Ratios higher than 50% indicate high levels of debt and that the applicant is likely not financially ready to take on a mortgage loan. Lenders often deny loans to applicants with DTI this high.

41% to 49%:

Ratios in this range indicate substantial debt and therefore a risk to take on a mortgage loan as well.

36% to 40%:

Ratios in this range indicate a debt level that likely still allows enough income to cover the cost of a mortgage. Lenders are more likely to approve loans for applicants with DTIs in this range.

Below 36%:

DTI ratios below 36% indicate manageable debt. Applicants should not have any trouble qualifying for new loans or lines of credit.

A Final Note:

VA loans generally allow higher DTIs than FHA and conventional loans.