Check to See What You Can Afford
After you’ve done your research, it’s time to figure out how much you can afford to spend on a property. Quicken Loans’ Mortgage Calculator allows you to enter real numbers based on various scenarios and current mortgage rates.
For example, most budgets recommend allocating 28 percent of your post-tax income to housing payments, including homeowners insurance and property tax. For example, if you earn $60,000 after taxes, 28 percent of that is $16,800, or $1,400 a month.
Every circumstance is unique. You may have charges in your monthly budget that impact your bottom line, such as child care, auto payments, or school loans; the main thing is to establish a monthly payment that you can live with.
Choose Wisely
Just as it is critical to examine all of your loan alternatives, it is equally crucial to spend some time researching possible lenders.
“Most people begin the conversation with, ‘What’s your rate?'” Banfield adds. “That inquiry has apparent value, but it’s the wrong method to identify the lender you’re looking for and the funding you require.” You’ll spend 30 days applying for a mortgage and 30 years paying it off.”
According to Banfield, the following are some considerations to consider when looking for a lender:
A working knowledge of the lending choices available
What rate, point and charge options are available?
The reputation of the company (You can use the J.D. Power survey to validate your findings by ranking lenders and servicers in terms of client satisfaction.)
Refrain from Opening New Accounts
If you’re looking for a new place to live, chances are you’ll want to furnish and decorate it as well. While the “furniture sale and 5% discount on all purchases” credit offer may appear appealing at the time, it’s advisable to wait until your loan is completed before creating any new credit accounts or lines of credit.
Each loan has its own set of terms and restrictions, and taking on more debt could affect the loan you obtain or change one that is already in the works.
