Considering that buying a home (especially your first) can easily be the biggest purchase decision you’ve ever made, it might go without saying that doing your research makes a difference. Here are a handful of tips that you can follow to prepare for the process.
Learn the overall home buying process. Understanding the basic steps included in the home buying process can help you make better decisions. Take some time to learn basic mortgage and real estate lingo. A mortgage glossary can be found on my website at: http://steamboatrealtor.com/tools_glossary.php
Know your debt-to-income ratio. This number compares your monthly bills to your average monthly income. This ratio is something your mortgage lender will analyze to determine your loan qualification. Most lenders prefer your debt not to exceed 20% of your net monthly income.
Set your budget. Use a simple mortgage calculator to gauge the monthly mortgage payment you can afford. Once you know your affordable monthly budget, you can limit your search to homes within a predefined price range.
Save some cash. There will come a point in the process where cash reserves will be needed. First, mortgage lenders like to see some money saved for closing costs. Second, additional cash will be helpful for often overlooked expenses involved in moving, buying furniture, and other costs that may arise.
Know your credit report. Get a copy of your credit report and look it over for errors or inaccuracies. You can obtain your copy at http://www.annualcreditreport.com/. Once you’ve seen your report, fix errors quickly! If something in your report doesn't seem right, submit a correction request. This can be done online with the company that produced the report.
Learn the overall home buying process. Understanding the basic steps included in the home buying process can help you make better decisions. Take some time to learn basic mortgage and real estate lingo. A mortgage glossary can be found on my website at: http://steamboatrealtor.com/tools_glossary.php
Know your debt-to-income ratio. This number compares your monthly bills to your average monthly income. This ratio is something your mortgage lender will analyze to determine your loan qualification. Most lenders prefer your debt not to exceed 20% of your net monthly income.
Set your budget. Use a simple mortgage calculator to gauge the monthly mortgage payment you can afford. Once you know your affordable monthly budget, you can limit your search to homes within a predefined price range.
Save some cash. There will come a point in the process where cash reserves will be needed. First, mortgage lenders like to see some money saved for closing costs. Second, additional cash will be helpful for often overlooked expenses involved in moving, buying furniture, and other costs that may arise.
Know your credit report. Get a copy of your credit report and look it over for errors or inaccuracies. You can obtain your copy at http://www.annualcreditreport.com/. Once you’ve seen your report, fix errors quickly! If something in your report doesn't seem right, submit a correction request. This can be done online with the company that produced the report.
Get pre-approved for a loan. Talk to a mortgage lender in advance of shopping and get pre-qualified for the amount you hope to spend on a new home. With this "pre-qual" letter in hand, you will earn more credibility in the eyes of the seller and more easily progress to the next steps in the buying process.
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