If you are planning to buy a home, one big factor that needs to be considered is the financing that you will use for the real estate purchase. Most homeowners don’t have enough money to pay cash for a home, so they need to find a good financial institution to help with the mortgage.
There are several things that you should consider when you are working to get a mortgage for your home:
Save for a Down Payment
Even though there are programs that can help if you don’t have a sizable down payment, it is ideal to have at least 20% down for the purchase. By saving up for this down payment, you have the benefit of building equity right away because the mortgage amount will be lower than the value of the home.
Improve Your Credit
Credit scores matter, especially when it is time to get a mortgage. Prepare in advance by improving your credit profile as much as possible. You need to show that you can effectively manage your current debt, to help the lender see that you will be a good risk for the financing on the home. Pay your bills on time, and work to pay down current balances to keep your debt-to-income ratio lower than 36%.
Get Mortgage Pre-Approval
Before you start shopping, it is beneficial to get pre-approved for a loan. This pre-approval process will help you to know how much money you will qualify for when you are ready to purchase a home. Then, you can have realistic expectations when you are searching for homes, to make sure that you choose properties within your budget.
Consider Other Homeowner Expenses
Even though you have been pre-approved for a certain amount on your mortgage, it doesn’t necessarily mean that you need to use all of that money. Make sure that you have a clear idea about your mortgage payment as well as other homeowner expenses, such as utilities, insurance, maintenance, property fees, and homeowner association fees. You need to be sure that you will be able to comfortably meet all of the payments after you move into the home.
Don’t feel obligated to choose the first lender that you talk with. In fact, it is a good idea to shop around to ensure that you are getting the best rate available. Since the loan amount will be quite sizable compared to your other debt, even small changes in the interest rate can make a big difference over time. So, look for the best interest rate that you can find to save money on interest costs.
At Duffy Realty of Atlanta, we are experts in the real estate industry. When you are ready to buy a home, we will gladly help with every step that will be required along the way. We have great connections with trustworthy lenders, and will make some recommendations to help you get a mortgage. Contact our office for more information: (678) 318-1700