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What does your income mean in terms of buying a house?

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  • Jeff Thomas

    Mortgage Advisor, Family Lender
    www.lendingsolutions.net  
    703-830-9808

    Jeff Thomas is a Mortgage Advisor and Financial Educator with Family Lender, Inc. located in Fairfax, Virginia. Jeff has seen the mortgage business change significantly in the 15 years he has been in the business. Changes such zero down loans, to relaxed underwriting guidelines to borrowing more than the house is actually worth on a purchase or refinance transaction.  With the changes in the mortgage industry, Jeff has had to make changes in the way he performs his job. Jeff originally thought he was a loan originator, but after realizing the positive impact he could have on other peoples lives he made some basic adjustments to his business and now sees his position and career as a financial educator. By taking the time upfront to get to know the people he serves, Jeff has been able to positively impact and improve the lives of the people he works with by providing relevant and timely advice. . This assistance comes in many forms, from insurance to painting to helping interview the right retirement professional. This core group of professionals allows Jeff to concentrate on providing the right advice for each person he works with. Jeff is one of 200 people in the country that is both a Certified Mortgage Planning Specialist – CMPS and a Certified Liability Advisor – CLA. Jeff recently co-authored a book with Todd Ballinger, called “Borrow Smart Retire Rich”.  The principles addressed in the book will be covered throughout the video.  Jeff hopes you gain insight on how to purchase and finance a home and hopefully you will find your time well spent and walk away with some information you did not know before.  Jeff Thomas, Where Advice Does Make A Difference! 

  • What does your income mean in terms of buying a house?

    In this video, mortgage advisor, Jeff Thomas describes how to purchase your first home and the process you must go through to obtain a mortgage. This video is designed for first time homebuyers and also provides valuable information to indivduals who have purchased a home in the past. This video includes an overview of the four parts of a loan file, mortgage jargon, the loan process, house hunting, the types of mortgages available and the 7 steps on how to manage your mortgage correctly.

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    Mortgage, House, Purchasing, Buying, Credit, Payment

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  • Transcripts

    Host: What does your income mean in terms of buying a house?

    Jeff Thomas: Income as it pertains to buying a house is huge. Income and credit combined with your debt ratio is going to determine exactly how much home you can buy. So the more income you have and the lower your debts, the more home you are going to be able to buy. The more income you have and the higher the debt you have, the less home you are going to buy. So if you have a moderate income and low debts you are probably going to be able to afford the home that you want but everything in the mortgage industry works on what we call a ratio. You have a Front Ratio or a Housing Ratio which Fannie Mae and Freddie Mac have come to conclusion that 28% of your income can be used for your house payment and 36% of your income can be consumed by all of your debts. That could be your house payment, your credit card payment or your student loans. So the more income you make, the higher those numbers are going to be. But the most important factor in all of this is with the advent of technology Fannie Mae and Freddie Mac have -- they used automated underwriting and you are going to take your particular loan situation submit it to their automated underwriting process in their engine and it's going to come back with findings and those findings may or may not be higher than 28% or 36% so you might be able to buy a house with really good credit and have your house payment consume 40% of your income. But you might have marginal credit and your house payment might only be able to consume 28% of your income. So income and credit together are going to be able to come out with how much home you can afford. 1

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