Are You Ready to Purchase a Home?

    Are You Ready to Purchase a Home?

    Oct 30, 2020

    There are several important factors that determine if you are ready to transition from renting to owning your own home. At ERA King Real Estate, we believe in equipping you and your family with the knowledge and resources to make an informed decision before you begin searching for a home. Home ownership will give you a great sense of pride, and ERA King strives to see you realize your dream of owning your own home. 

    So how do you know if you are ready for home ownership? Home ownership is both a major opportunity and responsibility. Before you start looking at homes, it is always a good idea to discuss your options with a mortgage lender. The mortgage lender or bank can guide you in the necessary steps to prepare for mortgage requirements and pre-approval for your home purchase.  

    During the pre-approval process, you may have to provide some financial information to your lender. These items can include pay stubs, tax forms, and bank statements. The lender uses this information to pre-approve you for a certain sales price and loan amount. Generally, lenders are looking for stable income and work history as well as adequate savings and money management. 

    There are several types of home loans. The most common and traditional mortgage loans are Conventional, FHA, USDA, and VA. Each loan option has its own requirements for down payment, credit scores/history, income, and liabilities (debts). During the pre-approval/pre-qualification process, your mortgage lender should explain all requirements for each loan option. The three main items involved in the pre-approval calculation that mortgage lenders use are: credit score, debt to income ratio, and assets/funds to close the loan (which means funds necessary for down payment). 

    Once you are pre-approved with a reputable mortgage lender, it is important to discuss where you are most comfortable with your total monthly mortgage payments. You want to make sure you stay in a price range that you will be comfortable paying for the long term. A total monthly mortgage payment includes principal & interest (this is your loan amount times your interest rate), homeowners insurance, and property taxes. In some cases without a substantial down payment, you may have a fourth item on your monthly mortgage payment called mortgage insurance. Even with these 3-4 items together, you could still be paying less for your monthly mortgage than your current monthly rent. 

    Your mortgage lender will guide you through selecting the best financing option for you. These mortgage loan guidelines and qualifications change from time to time. Therefore, your lender is your best resource for assisting you in choosing the home loan that best meets your needs.

     

    If you are interested in buying your first home and are looking to get pre-approved to discuss your financial options, ERA King Real Estate can help! Nick Veres, our in office Mortgage Consultant, with Lendello Mortgage is available to answer any home financing questions that you may have.