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Use A Mortgage Calculator To Answer Your Early Home Financing Questions

Financing a home is an important factor that you will need to consider during your San Diego buying journey. As a home buyer, you will want to accurately determine what you can afford, before you fall in love with a home that is outside of your price range. When the time is right, we can help you find a local lender who will provide you with exceptional service. However, before you meet with a lender, we invite you to use a mortgage calculator to gain better insights into current interest rates, so that you can receive a home loan that is best suited to your financial more.


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Why Should You Use A Mortgage Calculator Before You Start Attending Open Houses In San Diego?

A mortgage calculator is a great tool that far too many California home buyers overlook during their real estate journey. With the help of a mortgage calculator you can determine what type of mortgage rating you will receive, which is the first step to getting pre-approved. Mortgage pre-approval can even help you to speed through the underwriting and loan approval process, which is especially important in the competitive San Diego housing market.

Did you know that with a mortgage pre-approval you can also receive a number of benefits? One of the best benefits will be your ability to edge out other buyers by expediting your ability to make a valid purchase offer on a home. Most sellers (and their real estate agents) are more likely to take your offer into consideration if you have a pre-approval letter from your bank, which means that you can more easily make an offer the day you fall in love with your new San Diego dream home.

Speaking of your San Diego dream home, another benefit of the mortgage calculator is that you can more accurately determine what type of dwelling you can afford. From a luxurious condo to a five bedroom home near the bay to the perfect starter home, make sure that you accurately assess your finances before you fall in love with a home that you can't afford. In addition to using a mortgage calculator, you should take the time to make sure that you have completed the following financial steps before you seek pre-approval from a bank or lender:

  • Get a copy of your credit report. Be sure to resolve any of your credit issues, so that you can have an exceptional credit score before you apply for a pre-approved mortgage rate. Remember that the closer you are to a FICO score of 850, the better you will look in the eyes of a lender. In other words, by fixing your credit early on in the home buying journey, you are more likely to receive the mortgage rate that you need to afford your dream home.

  • Gather your relevant financial documents. These documents include your pay stubs, W2s (from the current year and previous two years), last two federal reports, and two months of bank statements from all of your financial accounts. If you are applying for a joint mortgage with your significant other or spouse, then you should also gather together their financial documents.

  • Learn about the different types of mortgages. Whether you are seeking a conventional home loan vs a FHA or VA loan, take the time needed to educate yourself, so that you can make the decision that is best suited for your current and future financial state. You will also need to decide if you want a fixed or adjustable rate; as well as the mortgage term (15 or 30 years are the most popular lengths).

  • Understand your total debt-to-income ratio and your housing debt-to-income ratio. These two ratios will be carefully considered by a lender as they determine your qualified mortgage rate. Your housing debt-to-income ratio refers to the amount of money that you spend each month on housing, as compared to your gross monthly income. In the eyes of many lenders, this ratio should be 28 percent or less. Conversely, many lenders believe that your total debt-to-income ratio should not exceed 36 percent.

How Much House Can I Afford In San Diego?

Asking yourself, "how much house can I afford in San Diego" is an important question that should be answered at the beginning of your home buying journey. While there isn't a set formula to determine what you can afford, a mortgage calculator can give you vital insights that will help to shape your real estate buying experience. The mortgage calculator will help you to better understand how much you will need to borrow, what type of interest rate you will receive, the anticipated length of the loan, and what other factors, such as property taxes, you will need to consider. By understanding the latter factors, you can receive an estimate for your monthly house payment, which will help you to make a financial plan for the type of home that you can comfortably afford in San Diego.