Buying a new Boston Seaport condo is exciting – looking at all the customized kitchens, touring Seaport condo open houses, planning where all your furniture will be paced. But before you get to all the fun stuff, it’s important to know exactly how much of a Boston Seaport condo you can afford. Sitting down with a lender and getting pre-approved for a loan at the beginning of the Boston condo for sale buying process provides a clear picture of what you can realistically afford and helps prevent potential disappointments down the road.

Here’s are the key factors lenders typically evaluate when helping to determine your buying power:

1.  Your Assets

One of a lender’s biggest concerns is always whether a borrower will have the income coming in and the financial resources already on hand to keep up with their mortgage payments, regardless of what else is going on in their financial life.Therefore, you will be required to provide documentation of assets showing where money for the down payment is coming from and what your savings and investments currently look like. The bigger your cushion, the more likely lenders will think you can afford all mortgage costs and fees, and all other home-related financial obligations afterward.

2. Debt-to-Income Ratio

Making a steady income and showing enough money in the bank is critical, but not the sole factor in determining your mortgage worthiness. Lenders want to be reassured that you’ll be able to pay your mortgage in addition to all other outstanding debts currently in your name. To do this, they will look first at your front-end ratio, or housing ratio — your monthly Boston Seaport District condo payment (including insurance, interest, taxes, and PMI, if applicable) divided by your monthly income. The general rule of thumb is to keep this at or below 28%.

Next, lenders will consider your back-end ratio or debt-to-income ratio, a calculation that determines how much of your monthly pay services your existing debt (e.g., car loans, student loans, credit card payments, etc.). This calculation is your total monthly debt payments divided by your total monthly household income. The general rule of thumb for this calculation is to keep it at or below 36%.

3.  Your Credit Score

Credit scores reflect your credit risk level, with a higher score indicating lower risk. Your credit score is fluid, and changes as the elements in your credit report change. For example, payment updates or adding a new account could cause your score to fluctuate. FICO® scores are your credit rating. Scores can range from 300-850, the higher the better. Your FICO® score is calculated based on your rating in five general areas: payment history, amounts owed, length of credit history, credit mix, and new credit.

While a low credit score (typically considered below 620) doesn’t necessarily mean you’ll be denied for a loan, it certainly impacts the quality of loan you’re offered. Interest rates for scores in the 580 to 699 range could be anywhere from 0.5% to 4% higher than the lowest rate available — and that will make your mortgage more expensive. On the other hand, a score of 760 to 850 could land you the best possible rate, and a score of 700 to 760 could put you just 0.25% above the lowest rate.

4. Your Down Payment

Regardless of how low your mortgage rate is, the ability to offer a substantial down payment improves your overall buying power.There are plenty of benefits to the often-repeated 20% rule of thumb, in which you come up with 20% of the home sale price in cash. Putting this much money (or more) into a down payment can eliminate the need for private mortgage insurance (PMI), and allow you to negotiate for a lower interest rate, and, in competitive markets, could place you above the competition.

Contact us for more information on the home buying process.

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Author Profile

John Ford
John Ford
EXPERIENCE

Over the course of 20 years in the Boston downtown real estate market, John represented and sold numerous, condominiums, investment and development properties in Greater Boston and in the surrounding suburbs



In addition to representing Boston condo buyers and sellers, John is currently one of the most recognized Boston condo blog writers regarding Boston condominiums and residential real estate markets. John's insights and observations about the Boston condo market have been seen in a wide variety of the most established local & national media outlets including; Banker and Tradesman, Boston Magazine The Boston Globe, The Boston Herald and NewsWeek and Fortune magazine, among others.



HISTORY

For over 24 years, John Ford, of Ford Realty Inc., has been actively involved in the real estate industry. He started his career in commercial real estate with a national firm Spaulding & Slye and quickly realized that he had a passion for residential properties. In 1999, John entered the residential real estate market, and in 2000 John Started his own firm Ford Realty Inc. As a broker, his clients have come to love his fun, vivacious, and friendly attitude. He prides himself on bringing honesty and integrity to the entire home buying and selling process. In addition to helping buyers and sellers, he also works with rental clients. Whether you’re looking to purchase a new Boston condo or rent an apartment, you’ll quickly learn why John has a 97% closing rate.

AREAS COVERED

Back Bay

Beacon Hill

Charles River Park

Downtown/Midtown

North End

South End

Seaport District

South Boston

Waterfront

Brookline

Surrounding Communities of Boston
Contact
John Ford and his staff can be reached at 617-595-3712 or 617-720-5454. Please feel free to stop by John's Boston Beacon Hill office located at 137 Charles Street.




John Ford
Ford Realty Inc
137 Charles Street
Boston, Ma 02114

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