There are many people who are excited about buying their first house but feel confused by the mortgage process. There are a lot of things to navigate when buying a house, so the more prepared you are, the better. Here are some things you should know about home mortgages.
1. Be Able Prove A Down Payment
One of the things you need to start thinking about months before you buy a house is how you are going to get the down payment. Most lenders require you have at least 3% of the house, but ideally you should have 20% of the house. In some rare places in the country, mostly rural places, they will allow you to buy a house with 0% down, but that is not normal. So you need to start saving up now to buy a house.
When you apply for the loan, the lender is going to ask for proof that you have the down payment. If you are cashing in stocks for it, then you will need to prove that you own the stocks and how much they are worth, if you are being gifted the money, then you will need to have a gift letter from that person. If you are planning on paying from a savings account, you will need to get documentation from the bank that holds the account that the funds are there.
2. Get Preapproved For A Loan
Before you even start looking for a house, you need to get pre-approved by a bank or lender. Don't worry about it being the exact lender you will use; it is common to shop around for the lender as you get closer to the loan, this is because each lender will be able to give you slightly different deals, so you should choose the one that works best for you. But getting pre-approved for a loan is very important before you start shopping.
You may think that you can afford a certain amount, but banks and mortgage lenders have strict rules for the loan. They will give you a certain amount based on your numbers. So although you may want to get a house in a certain range, if the bank won't loan to you, then you can't get it. This number is based off of your credit score, your debt to income ratio, and how much you can put down in a down payment. Never go house shopping without a pre-approval.
By knowing these two things, you can be prepared for your home loan.Share
11 December 2017
When I started thinking about my life, I realized that I was spending a lot more money than I should be every month on little extras. I wanted to streamline things, so I decided to start focusing on getting my finances in order. I started looking around my house, and I was pleased to discover that there were more than a few things I could sell for a little extra cash. I put them online, and I was amazed to see how quickly they sold. After selling some things, I was able to get my finances in order, which was a huge relief. This blog is all about getting your finances in order.