Realty Executives Gateway Realty

Financing Steps to Buying Your Home

Financing - How much home can you buy?


Step 1: Get pre-approved


Lenders and financial experts recommend that your monthly debts should be no more than 36% of your monthly income. If you have additional outstanding debts such as student loans, credit cards or vehicles, you will need to factor in those monthly payments into your total monthly debt payments. 


5 Reasons to be Pre-Qualified

  • You won’t waste your time considering a home that you can’t afford

  • You will know in advance what your payments will be

  • You can select the best loan package without being under pressure. There are many options in today's market

  • Being pre-qualified will make your offer more competitive, and sellers will view it more seriously


Step 2: Gather documents/Take a look at your assets and monthly expenses


Your credit history is one of the principal measures used by alender to determine your interest rate. The better your credit, the better lending terms your bank or lending institution will be able to offer you. A higher interest rate translates into  a higher monthly mortgage payment. 


What not to do

If at all possible, you should avoid making a major purchase or changing your job if you’re seriously considering buying a home in the next few months. This may negatively affect your credit score.


Step 3: Talk to a qualified lender


We offer mortgage service here in our office through Richelle Rogers, who is a licensed mortgage broker through The Mortgage Group. But it’s entirely your choice who you want to work with.


Step 4: Know Your Rate - And Your Terms


When you start shopping for a loan, you’ll start looking at interest rates. The interest rates, terms and fees for a mortgage will be based on your qualifications as a borrower and on the current lending market. Keep in mind though that finding the right loan is not just about finding the lowest interest rate possible. Mortgage institutions offer loans of varying terms - typically 30, 20, or 15 years. Shorter term loans can save you thousands of dollars over the life of your loan if you can afford a higher monthly payment.


Step 5: Know Your Down Payment and Private Mortgage Insurance


The largest upfront cost in purchasing a home is the down payment. Most traditional lenders expect borrowers to put at least 20% of a loans total amount down. Borrowers who are unable to do so are required to purchase Private Mortgage Insurance (PMI). This insurance protects the lender in case of default by the borrower. Be sure to get a clear indication of the down payment percentage required by your lender. You will also want to know what kind of documentation your lender requires to verify that you have funds for the down payment.


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