Buying a home for the first time can be daunting, and you could be tempted to accept low teaser payments instead of checking the mortgage current interest rates. This will allow you to buy a more expensive house and end up losing it because you did not understand the kind of mortgage you have. By understanding mortgage rates, you can select the right term you can afford to pay and don’t end up losing your home because you are unable to pay.
To help demystify the process and get the most out of the purchase, let’s examine what you need to consider and expect before you take the plunge.
1. Check the comparable selling prices of homes in your area by searching multiple listing services, websites and the National Association of Realtors.
2. Hop online to get an idea of the mortgage current interest rates to determine your monthly amortization if you buy a house today. Talk to some mortgage lender about the rates you will qualify for depending on your income, how long you have been at your current job and how much is your other debt.
3. Find out how much your total monthly housing cost would be, including homeowner’s insurance and taxes. Pick a property in the area you want to live and call an insurance agent for an estimate so you will have a good idea how much you will pay. You can check your local property appraiser website to get an idea of the taxes you will pay.
4. Don’t overlook the upfront cost of settling in your home, which includes the title, settlement fees, homeowners‘ association fees, homeowners insurance, and taxes.
5. Determine how much you can afford. Look at how much is the down payment, monthly payment, property taxes in your chosen neighborhood, insurance cost, house improvement cost and maintenance and your closing cost. Other banks will give you a loan more than you want to pay for.
6. Talk to a reputable realtor about the real estate climate in your area and ask if they think the area will rise or hit bottom soon. Search for real estate listings online or drive around the neighborhood you are interested or talk to a real estate agent to help you locate a home that meets your price range and needs.
7. Taking excellent care of your investment can be very expensive and could drain your bank account if you don’t have an emergency fund for your home. Make sure you are ready for the effort and expense of home ownership before pulling the trigger so you won’t be caught off-guard. Regular maintenance will allow you to fix problems when they are manageable and decrease your repair costs.
In the beginning of home buying, get your free annual credit report to examine your creditworthiness and correct unresolved issues. Have your bank account statements, pay stubs, tax returns for the last two years, credit lines, and addresses of your landlords for the past two years.
Get pre-approved ahead of time from a local credit union or institution where you bank. Apply to multiple lenders and check the current interest rates they offer to increase your chance of getting your home loan approved.
Written by: Janet Grace Ortigas