There is nothing more exciting and terrifying at the same time then buying or investing in real estate. With that being said, you should never go blindly into a sale. Be as prepared as possible before exploring the world of real estate with a mortgage. An educated consumer is a smart consumer.
You have many options for financing real estate, from banks to lending establishments. There are a few things you want to keep in mind whenever financing real estate. The terms of the loan are the most important aspect and you want to be sure you completely understand how payment is setup, the lending agent’s ability to raise rates and when they may do this, hidden fees, and any other terms of the loan. This can often be quite confusing and may be written in such a way to confuse the average consumer so you may want an independent third party who understands financing to look over the terms for you. Make sure you fully understand your payments and the length of the loan.
Typically, your monthly housing expense, including monthly payments for taxes and insurance, should not exceed about 28% of your gross monthly income. If you don’t know what your tax and insurance expense will be, you can estimate that about 15% of your payment will go toward this expense. The remainder can be used for principal and interest repayment. Your proposed monthly housing expense and your total monthly debt service combined cannot exceed about 36% of your gross monthly income. If it does, your application may exceed the lender’s underwriting guidelines and your loan may not be approved.
Mortgage Lenders – Mortgage lenders issue mortgages to borrowers. They then process and sell the mortgages to large investors or into the secondary mortgage market. The Lake Gaston area has many Mortgage lenders to choose from. Many Realtors can refer you to experienced mortgage brokers which will allow you to compare rates, costs and terms of various mortgages.
Before buying your home you should calculate your monthly debt load. This includes all monthly debt obligations like credit cards, installment loans, car loans, personal debts or any other ongoing monthly obligation like alimony or child support. If it is revolving debt like a credit card, use the minimum monthly payment for this calculation. If it is installment debt, use the current monthly payment to calculate your debt load. And you don’t have to consider a debt at all if it is scheduled to be paid off in less than six months. Add all this up and it is a figure we’ll call your monthly debt service.
The larger the down payment, the less money you need to borrow. This means a lower monthly payment. However, remember that in addition to your down payment and monthly payments, you will need money to pay for closing costs, moving, appliances, household setup, a reserve for family emergencies, and other miscellaneous items. So don’t plan to put your last penny down on the closing table.
Having some money in your bank account is a good idea when going out shopping for your mortgage. Even if you have poor credit, if a lender sees you have several thousand dollars in the bank, they may feel you are helping to repair your credit and have a cushion in case of emergency. Even $1000 can help. Plus, when it comes time to buy a home, you will need earnest money cash and inspection costs out of pocket. Having this cash on hand will make the process more smooth and stress free.Like this blog post? Buy me a coffee or send me a tip!!!