Marva Morris: Hello everyone! I am Marva Morris your New Jersey Realtor and I’m here today with Matt Fishman who is a mortgage lender. Tell us all about yourself Matt.
Matthew Fischman: Thanks for the introduction Marva. My name is Matt Fishman and I am a mortgage loan officer with 16 years of experience. I work at Barrett Financial Group and I’m really looking forward to sharing some helpful tips with you today to help you in the home buying and house hunting process.
Marva Morris: Excellent! So I want you guys to get excited. Matt and I are creating a series of different tidbits to tell you all about the mortgage process. But we’re going to give it to you in small spurts. So this way you can just watch them as you get a chance. So today what we are talking about is how to prepare financially to buy a new home. So Matt’s going to give us some of the things that mortgage companies are looking for so that when you get ready to purchase your home you know that you are ready and raring to go. Here we go. Yes!
Matthew Fischman: So like anything in life a lot of the key is in the preparation. So becoming a homeowner and qualifying for a mortgage is no different. When you go to get your mortgage approval there’s three main things that the lender is going to look at.
They’re going to take a look at your credit and your credit report. They’re going to take a look at your employment and income. And they’re going to take a look at your assets. In other words the money that you have in the bank. So there are some steps that you can take prior to going to buy a house and getting pre-approved for a mortgage so that by the time you’re ready to do so, you’ve kind of already turned those knobs and tweaked those dials, to paint yourself in the best light.
When it comes to credit, just to kind of break this down, a few things you would want to do probably go without saying. But the biggest component to your credit report is how timely your payments are so you want to make sure that you do pay everything on time. You want keep your score as high as possible. You also want to manage your debt. The biggest thing that’s looked at there is your credit card balances. So you want to try to drive those as low as possible. The lower those balances are, the higher your credit score is. And the 3rd thing to be mindful of is how many other institutions have checked your credit over the last 12 months. So if you need to buy a car or there’s a great offer on a 0% credit card or something like that, it’s okay to have your credit checked a few times here and there over the last 12 months. But if you excessively have it pulled and have taken out a ton of debt over a short period of time that’s looked at negatively so you want to definitely keep an eye on that and not go overboard.
The next thing is employment and income. The lender is going to look mostly for stability so they don’t want to see a ton of job hopping and job changes. We look back over the last two years, so ideally if you’re making solid money and you’re in a stable full-time position, generally speaking you would not want to rock the boat, and you would want to stay in your current position which shows the stability. Now there’s a few caveats to that and ultimately speaking to a lender and having them give you feedback about your own unique scenario is best. For example, if you were able to get a new job with a higher full-time salary you would want to go ahead and take that offer, however there’s other variable components like your bonus, commission and over time where if you take a new job you kind of reset the clock on those. If you’re earning those types of incomes you’d be more biased to staying in your current job. Again consult with a lender. They can give you the best advice for your unique situation.
Marva Morris: Let’s say I’m at the same company and I get a promotion. Let’s say 6 months pass and I get an opportunity to get a new job, but within the same company, how’s that look?
Matthew Fischman: Great question Marva! So that’s always going to be looked at favorably. Any sort of promotion or enhancement to your job title or increased earnings at your same company – that’s going to always be favorable. So yeah, definitely don’t pass up those opportunities if they’re presented to you. Again, great question. And then your kind of last piece of the puzzle here is your assets. So obviously you’re going to need money for your down payment and to pay what’s alled closing costs. You’re definitely going to want to gonna to be in a savings mode and be as frugal as possible. The higher the balances that you can show in your bank accounts the better. Because that gives you the ability to make a larger down payment. Now there are low down payment programs available out there, typically as low as 3% down, but when you’re talking 3% on hundreds of thousands of dollars, with closing costs on top of that, it still does add up. So the more you can save the better. Marva may have some tips for you on ways to achieve that, so I’ll let her take the floor here.
Marva Morris: Thanks you. So what are the ideas that I have for someone who’s thinking about getting a mortgage – You’re going to buy a home so one of the things that you can do that I would recommend that you start doing now, is give yourself a part-time job. Take every bit of that income and bank it. So this way you have a nice amount of money that you have saved and you can show where the money came from. But it’s not coming out of your everyday budget, so it’s not affecting you as much as if you’re pulling money directly out of your savings account because you always want to keep some emergency money too, right. You don’t want to buy a house and have nothing in the bank so that’s just one of my suggestions for you.
And another thing I suggest if you have extra income in your current salary – if you’re paying $1,200 per month in rent let me know where you live. That’s a great low affordable rent for sure, especially these days. So what you want to do is, with the mortgage, you probably would be paying about $1,500 or a little more, so you take that extra money and you save that every month. Put that in a bank account where you can’t touch it. Cut up the credit card or the the debit card that goes to that account and save that money additionally every month because what that’s going to allow you to do is get used to paying that mortgage payment. But while you’re doing that and training yourself financially you have all that extra money to put towards a mortgage down payment.
You can buy yourself a new living room set; lots of other things you can do with that money, but it’s great to have some emergency cash so that’s just a couple of tidbits from me Matt. Thank you so much. Anything that you want to say before we wrap up?
Matthew Fischman: That’s some priceless advice right there Marva! But I definitely gave you all the knowledge that I have on this topic and I want to thank everybody for their time today. Again, I’m Matt Fishman with Barrett Financial Group and I hope everyone has an excellent rest of their day!
Marva Morris: Excellent! I am Marva Morris your New Jersey Realtor, moving you forward. Thank you for joining us today and don’t forget to look out for our other videos. Looking forward to seeing and talking to you soon. Have a great day. And another thing – Matt and I will be doing some homebuyer seminars so look out for those too. We will answer all of the questions you have and go through the entire home buying process. Have an awesome day! We look forward to seeing you soon!