Are you thinking of getting a mortgage? Here are some simple tips for people who plan on getting a mortgage: Know your budget.
Before even thinking of a mortgage, you first need to know how much you can really afford to pay for a house monthly.
Calculate how much you make and your typical expenses.
Don't even consider the maximum amount that you can afford, instead think of a comfortable figure that you can pay regularly without stretching your finances or giving up important things in your life.
This is the most crucial part of deciding on a mortgage.
If you take out a home loan that you cannot possibly pay, you are just digging yourself into a hole of debt that you will not be able to climb out of.
If your dream house is currently out of your reach, you should settle for what you can afford.
Otherwise you will be building a mountain of debt and your dream house will turn into your worst nightmare.
There are some mortgage calculators online that you can use to figure out the mortgage payments that you can make.
Plan on cutting some unnecessary expenses.
Figure out how much you spend and on what.
Some necessary expenses are transportation, food, insurance payments, utility bills, etc.
How much do you spend on unnecessary things like eating at expensive restaurants or splurging on expensive clothes every week? You may want to cut down on such expenses so that you can have more savings for your down-payment and home loan payments.
When you do buy a house, remember that you need to budget your money properly.
Only spend on entertainment and other unessential expenses after you have made your mortgage payments and paid for other necessities.
Identify how much money you can out down.
Down payments on a house are anything from 5-10% of the purchase price.
This is often a major obstacle, especially for first time home buyers.
However, a larger down payment means paying less interest on the loan and getting better interest rates.
Get your documents ready.
You can't just walk into a bank or lending company and ask for a loan without showing them proof that you can afford the payments.
Obviously, you will need many documents like your IRS returns for the past few years, proof of current salary, assets, debts, etc.
Research home loans and interest rates.
The internet is a wonderful tool for doing your homework on mortgages.
Research about the different types of home loans and shop around for current interest rates.
Make yourself familiar with common terms used so that when you go to see a loan officer, you will know what he is talking about.
Think seriously about having a shorter loan period.
Longer loan payment periods mean paying more interest.
A shorter period means paying less interest and overall you will be saving tens of thousands of dollars.
Don't forget closing costs.
Even after you have made all your regular mortgage payments and your loan period is over, there are still some closing costs to consider.
The closing fees or settlement costs and can be a hefty 3-5% of the purchase price.
Remember to plan that in your budget.
Before even thinking of a mortgage, you first need to know how much you can really afford to pay for a house monthly.
Calculate how much you make and your typical expenses.
Don't even consider the maximum amount that you can afford, instead think of a comfortable figure that you can pay regularly without stretching your finances or giving up important things in your life.
This is the most crucial part of deciding on a mortgage.
If you take out a home loan that you cannot possibly pay, you are just digging yourself into a hole of debt that you will not be able to climb out of.
If your dream house is currently out of your reach, you should settle for what you can afford.
Otherwise you will be building a mountain of debt and your dream house will turn into your worst nightmare.
There are some mortgage calculators online that you can use to figure out the mortgage payments that you can make.
Plan on cutting some unnecessary expenses.
Figure out how much you spend and on what.
Some necessary expenses are transportation, food, insurance payments, utility bills, etc.
How much do you spend on unnecessary things like eating at expensive restaurants or splurging on expensive clothes every week? You may want to cut down on such expenses so that you can have more savings for your down-payment and home loan payments.
When you do buy a house, remember that you need to budget your money properly.
Only spend on entertainment and other unessential expenses after you have made your mortgage payments and paid for other necessities.
Identify how much money you can out down.
Down payments on a house are anything from 5-10% of the purchase price.
This is often a major obstacle, especially for first time home buyers.
However, a larger down payment means paying less interest on the loan and getting better interest rates.
Get your documents ready.
You can't just walk into a bank or lending company and ask for a loan without showing them proof that you can afford the payments.
Obviously, you will need many documents like your IRS returns for the past few years, proof of current salary, assets, debts, etc.
Research home loans and interest rates.
The internet is a wonderful tool for doing your homework on mortgages.
Research about the different types of home loans and shop around for current interest rates.
Make yourself familiar with common terms used so that when you go to see a loan officer, you will know what he is talking about.
Think seriously about having a shorter loan period.
Longer loan payment periods mean paying more interest.
A shorter period means paying less interest and overall you will be saving tens of thousands of dollars.
Don't forget closing costs.
Even after you have made all your regular mortgage payments and your loan period is over, there are still some closing costs to consider.
The closing fees or settlement costs and can be a hefty 3-5% of the purchase price.
Remember to plan that in your budget.