For many potential home buyers, understanding credit can be a confusing puzzle to solve. We'll try to help you put the puzzle together from the perspective of getting approved for a home mortgage.
Learn about the significant changes made by Fannie Mae to help people burdened with student debt qualify for home loans. Many first-time home buyers will be affected by these changes.
If you have been turned down for a home loan in the past because your debt-to-income ratio was too high, Fannie Mae just announced it has raised the DTI ratio from 45% to 50%. If you can document that someone else is making your student loan payments, say your parents or your employer, Fannie Mae will no longer count it toward your DTI.
HOME BUYER FAQ: How much money will I have to come up with to buy a home?
Answer: It depends on several of factors, such as the price of the home, the type of mortgage you get, and what seller concessions are negotiated in your purchase agreement. In general, you will need to have enough money to cover the cost of (1) earnest money, (2) down payment, and (3) closing costs (the seller can pay all or most of your closing costs, depending on the loan).
Buyers are often confused about the difference between the Interest Rate and the Annual Percentage Rate (APR).
The interest rate is a percentage of the principal loan amount, and reflects the base cost of borrowing the money.
The Annual Percentage Rate (APR) takes the base interest rate and adds to it the additional costs to get the loan.
What are these additional costs?
And, why is it important and useful for the buyer to know and understand the APR?