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For first-time buyers, the process of securing a mortgage can be confusing and intimidating. First, you need to determine how much you can comfortably spend on a home without putting yourself in financial jeopardy and making it difficult to pay your other bills.
You can get a good idea about how much you can afford before going to the lender by using an online mortgage calculator. You’ll be cued to enter some numbers based on your financial situation and the calculator will provide a figure based on that information.
A mortgage payment calculator is great to get an estimate of what your monthly payments might be. Just enter the price of home you can afford, the down payment you’re planning to make and the interest rate you expect to secure, and you’ll get a good idea of how much you’re going to pay each month.
Lenders usually recommend that you should spend no more on the cost of a home than three to five times of your annual household income assuming you’re making a 20 percent down payment and your other debts aren’t overwhelming.
The pre-approval process is done by a mortgage lender and involves providing some basic information, such as your income and assets, such as investments and savings.
The lender then reviews your credit and the information you provided and lets you know how much they’ll lend. You’ll then be able to target the appropriate price range of the homes you look at to the ones you can afford.
The pre-approval process further involves becoming pre-approved for credit. You’ll then provide financial documents such as W-2 statements, bank account statements and paycheck stubs to the lender so they can verify the information you’ve provided.
Make sure you understand how to know if you’re ready for a mortgage and avoid being disappointed because the lender turned you down. First, take a close look at your monthly budget and begin to save for a substantial down payment.
Look closely at the neighborhood and type of home you’re considering. Are homes priced at a cost you can afford or are they beyond your means? Long before the pre-approval process you should monitor your credit report carefully and take care of any issues.
Make sure you keep all monthly payments current and work to reduce your debt. Finally, educate yourself as much as possible about financing a home so you’re up-to-date on the changes and nuances that occur on a constant basis. Preparation is the key to helping the finance portion of buying a home go smoothly.
If you’d like to receive email updates on pricing and availability on homes to start your research, just email me: Cheryl.major@nemoves.com
I’m happy to help you by arranging for you to get MLS updates that will allow you to research in real time which houses are coming on the market, which are selling, in how many days and for how much money. It’s important information to have, and I’m offering it to you free and with no obligation.
Helping You Find a Home You Love
Cheryl Major, Realtor
Cheryl Major lives in Westford and is a Realtor with Coldwell Banker. Follow Cheryl on Twitter @WestfordAreaRE and on Facebook:Â https://www.facebook.com/WestfordAreaRealEstate/
Cheryl is a full time residential Realtor with more than 25 years experience.
Questions? Email Cheryl at Cheryl.Major@nemoves.com and be sure to put Real Estate Question in the subject line. Your question and its answer will be included in a future article or will be responded to directly.
