FIND THE RIGHT HOME FOR YOU
There are many factors to consider before buying a home, which can be determined by some basic facts. How big is your family? What neighborhoods are you willing consider? How are the schools? Is a condo an option? Based on your income and assets, what can you afford?
SAVE FOR A DOWN PAYMENT
Almost all mortgage loans and lenders require some amount of money as a down payment. The money you set aside for this will determine the kind of mortgage you qualify for, and will also impact how much you can afford to borrow for a home.
Consider Down Payment Assistance
It’s important to know that there are more than 2400 home buyer assistance programs in the U.S. that offer down payment help in the form of grants, low-interest or deferred loans, forgivable loans, and other programs. Help with closing costs are also available.
CALCULATE WHAT YOU CAN AFFORD
Consider Your Income
A lot of banks will require that your monthly costs can’t exceed a percentage of your income, (for example 28%). That means if you earn $50,000 per year, your total monthly housing costs should not exceed $1166 (28% of your monthly income). Using a mortgage calculator you can use this number to figure out how much you can afford.
Consider Your Debts
In addition to your income, if you have recurring debts, the total monthly payments on existing debt plus new payments for your mortgage may not be allowed to exceed a certain threshold (for example 41%). Using the example above that would mean that if your monthly debt payments are in excess of $541 per month (bringing your total debt of $541 + $1166 = $1708 or 41% in total)
Consider The Down Payment
Most lenders prefer a down payment of 20% or higher to qualify for a conventional loan, but there are loan options where you can put down less. However, be aware that with a smaller down payment, you’ll likely be required to pay for mortgage insurance, and your loan application will be subject to greater
By know you should have a pretty good idea about what kind of home you’re looking for. You also know how much you have saved for a down payment, which will determine the type of loan you should pursue. If you’ve compared a few rates you should request a pre-qualification letter.
Getting pre-qualified for a mortgage loan requires that you select a mortgage lender to work with and get your loan. Mortgage pre-qualification is a promise from the lender that you are qualified to borrow up to a certain amount of money at a specific interest rate, subject to a property appraisal and other documentation.
It is not uncommon for a seller to receive multiple offers on their home, so having a pre-qualification letter could be the difference in your ability to purchase the home you desire.