Question 1

How Much Can I Afford?

Accepted Answer

common guideline for determining how much house you can afford is the 28%/36% rule. This rule suggests that you should allocate no more than 28% of your gross monthly income toward home-related expenses, such as your mortgage, property taxes, and insurance. Additionally, your total debt obligations—including your mortgage, credit cards, auto loans, and student loans—should not exceed 36% of your gross monthly income.

By following this rule, you can maintain a comfortable balance between your mortgage payments and other financial commitments.

Question 2

What is a Mortgage?

Accepted Answer

A mortgage is a loan agreement between you and a lender that allows you to borrow money to purchase a home or borrow against the equity in a property you already own. In exchange, the lender holds the right to take ownership of the property if you fail to repay the loan, including interest. Essentially, a mortgage secures the loan with your home as collateral.

Question 3

What is a Reverse Mortgage?

Accepted Answer

To qualify for a reverse mortgage loan you must own a home, be at least 62 years old and have enough equity built up in your home. The loan works by the lender making payments to the borrower based upon a percentage of the equity that has been built up in the home over time.

Question 4

How to Get Pre Approved For a Mortgage?

Accepted Answer

To get pre-approved for a mortgage, follow these steps:
 • Check      your credit score: Start by reviewing your credit score to understand      where you stand before contacting lenders.
 • Review your credit history:      Ensure your credit report is accurate and address any issues that might      affect your approval chances.
 • Calculate your debt-to-income      ratio (DTI): Lenders typically look at your DTI to assess your ability to      manage monthly payments. Knowing your ratio can help you understand what      loan amount you might qualify for.
 • Gather necessary documents:      Prepare your income statements, financial account details, and personal      information to streamline the pre-approval process.
 • Reach out to Dayo to help you      navigate acquiring your Home.

Question 5

Should I Refinance My Mortgage?

Accepted Answer

Refinancing can be a smart move, especially if it allows you to lower the interest rate on your existing loan. Traditionally, the rule of thumb has been that refinancing is worthwhile if you can reduce your interest rate by at least 2%. However, many experts now suggest that even a 1% reduction can provide significant savings and make refinancing a good option.

Question 6

What is Mortgage Insurance?

Accepted Answer

Mortgage insurance protects the lender by reducing their risk, allowing you to qualify for a loan you might not otherwise be eligible for. Typically, if your down payment is less than 20% of the home’s purchase price, you’ll be required to pay for mortgage insurance.

Question 7

How much of a mortgage can I qualify for based on my income?

Accepted Answer

A common guideline is to follow the 28/36% rule. Most financial experts recommend that no more than 28% of your gross monthly income should go toward housing expenses, and no more than 36% should be allocated to total debt, including housing, student loans, car payments, and credit card debt. Following this rule can help you maintain a healthy balance between your mortgage and other financial obligations.

Question 8

What Type of Loan do I Need to Buy a House?

Accepted Answer

The type of loan you choose depends on your long-term plans.
 • Fixed-rate      loans are ideal if you plan to stay in the home for many years. A 30-year      fixed-rate loan offers stability and predictable payments, providing      flexibility to manage other financial goals.
 • Adjustable-rate mortgages      (ARMs) come with more risk but can be a good option if you plan to sell or      refinance soon, as they often offer lower initial interest rates.
Choosing the right loan depends on your financial situation and future plans.

FAQ'S

Lending with Dayo