The Financing Process
Here’s an easy way to understand the financial steps you’ll need to take to guide you towards your new home.
Now that you have a clear understanding of the entire process, let’s look closely at each step.
How Much Can You Afford?
Before you can begin to search for a new home, you need to determine your budget and estimate how much you can afford. One of the most important factors in figuring out your financial budget is getting pre-approved for a mortgage. Pre-approval uses basic information as well as electronic credit reporting to determine whether a lender will loan you money. If you are pre-approved for a mortgage, the lender has given you a commitment to support your new purchase.
Once you have been pre-approved, you need to decide which type of mortgage to get. This decision is usually based on the interest rate of the loan and how much time you are given to pay the lender back.
When you apply for a mortgage, you will need to provide information regarding your income, expenses and obligations. To save time, have the following items available for each borrower:
Calculating Your Budget
To estimate your budget, add up your total financial worth and then subtract all the costs included in the purchase. Here are some of the expenses you will carry.
Most homeowners contribute a down payment on his or her new property. The down payment is a percentage of the purchase price that the buyer pays in full before closing. The larger the down payment, the smaller your mortgage will be.
There are quite a few costs when you’re buying a new property and it’s important to factor them into your budget. Here are some examples:
Now you’re ready to calculate your final budget. Remember to include all of your available monies, monthly salary, additional income, and then subtract the down payment, monthly mortgage payment, closing costs, moving costs, and any additional expenditures you might accrue. When you have arrived at your estimated budget, you are ready to begin the search for your new house.