How Mortgage Data Influences Real Estate Decision Making

How Mortgage Data Influences Real Estate Decision Making

So, you’ve finally found a home, and you’re ready to make an offer. You might be confident that you know the real estate market inside and out, but do you really?

Buying a home isn’t a thing you should do using the next available mortgage loan. It’s supposed to be as carefully researched a process as possible. Your biggest asset, next to the mortgage loan itself, of course, is the mortgage data you’ll gather during your due diligence process. Mortgage data can help you anticipate exactly what’ll be required for you to own a property—and whether or not you’re ready—before you cross the finish line. 

Here are seven ways that mortgage data influences real estate decision-making:

1. Mortgage Data Can Help You See How Much You Can Afford For A House

Your home budget should be based on how much mortgage lenders will allow you to spend each month. Before starting your search for a new place, figure out what this number is through an online lender. What is the best way to find out how much you’re qualified for? Request a ‘preapproval’ from several competing lenders that give estimates over email or over the phone.

2. Mortgage Data Can Help You Find Out If Your Credit Score Is Good Enough For Getting The Best Rate For Your Loan

Mortgage lenders usually pre-qualify you by looking at your credit score. Right now, the national average for a credit score is around 700. Any number above this range will typically qualify as ‘good,’ and anything below it would indicate a higher chance of an interest rate above 5%. On average, those with scores between 680 to 720 are offered rates that hover slightly above 4.5%; those below 680 will typically incur rates much higher than this. Ask your lender what types of loans they offer, and compare these offers to online mortgage quotes for the best terms and pricing.

3. Mortgage Data Helps You Know How Much Money You Need At Closing (And When)

Your closing costs include everything from origination fees, to home insurance and even HOA (Home Owners Association) dues and taxes. Keep in mind that your down payment amount will also be due at closing, along with the remaining principal balance on your mortgage loan. The average total cost of a transaction is around USD$3,000 for those who put in 20% as an upfront investment. Those with smaller down payments can expect to pay as much as USD$7,500 out of pocket before they get keys to their new home.

4. Mortgage Data Can Help Determine Whether Or Not You Qualify For A Loan

Although mortgages have strict qualifications now due to more stringent lending laws, financial institutions have processes in place that help them determine if someone is worthy of receiving a loan. These systems look at aspects like income, debt-to-income ratios, and credit scores, so they can determine how risky it would be to lend them some money.

5. Mortgage Data Can Affect Real Estate Investment Decisions

At its core, real estate investment is all about maximizing the return on your money so you can achieve your goals both now and in the future. If you’re considering treating your rental property as a business, you need solid financial information so you’ll understand how much cash flow it could provide once it’s rented out.

If you’ve owned rental property in the past, be sure to keep track of such numbers because they can directly impact whether or not you’ll be able to take out a loan for future purchases.

6. Mortgage Data Influences Tax Brackets

For many people, assets such as rental properties and stocks produce income that’s taxable in the year it was received. However, when it comes to real estate, depreciation can help offset some of your annual gains. When you depreciate a house, the value decreases over time until zero. This helps lower your taxable income because you’ll need to pay taxes on what you gain minus this decrease in value. If you’re unsure of the federal 2022 income tax brackets or which one you fall into, you can find current data on the IRS website.

7. Mortgage Data Can Help You Choose Properties

Many people are interested in investing their money into rental properties, but don’t know where to start. When choosing which properties are right for you, it’s important to use all available information at your disposal, including mortgage data.

This information can help ensure you find properties with solid cash flow so they can help fund your retirement plan. If you’re using an equity release plan, it may be helpful to look for properties that’ll provide solid cash flow and long-term appreciation.  


Home Mortgage Payment Calculations

You should manage your properties like they’re all part of one large portfolio by making strategic moves based on what the market conditions dictate. Although this is easier said than done, mortgage data can help give you a better idea of where your money stands so you can make the right choices when it’s time to invest.


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