section of Chapter Three.
During the pre-approval process you will fill out a non-binding application that includes your income and assets, your employment and current housing situation. The lender will run your credit to determine your FICO scores from all three credit bureaus and examine your liabilities. This will allow the lender to understand your financial profile and your Debt to Income (DTI) ratio. Your DTI is determined by how much you will pay in housing expense: principal, interest, taxes, insurance (and association fees where applicable) referred to as PITIA, and existing debt, such as auto loans/leases, credit cards, student loans etc., in relationship to your earnings. Your Loan Originator will match this information with various loan programs to determine which will best suit you.
STEP 3: CREATE A LIS TE A LIST OF NEEDS V F NEEDS VS. WANTS
Determine what is most important to you in a home — the non-negotiables — vs. what you’d like to have in a home — things you might need to let go or defer. Determine what you need (think number of bedrooms or bathrooms, garage, laundry room, finished basement, etc.) vs. what you want in your home (such as a fenced-in yard, gourmet kitchen, deck, walk-in closets). Then, write these items down so that you will eliminate wasting time and energy looking at houses that don’t meet your criteria, or your budget.
STEP 4: CHOOSE A LOCATION
Location, location, location! You hear that term in real estate often. The house is located where it is, so be as certain as you can that the home is in a place that will be comfortable and convenient for you.
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