Getting a first mortgage can be quite a daunting experience for many people who plan to buy their first home. Some think that is a very stressful thing that one has to go through to fulfill their dreams of owning their own house. But it doesn’t have to a stressful experience.
Follow these very simple steps an you’ll make getting your first mortgage more painless.
First, you should know your actual limit. You shouldn’t be doing this alone. Your mortgage broker or the loan officer can help you in finding out the how much you can actually borrow to get that home you’re eyeing. But even if you can get a big amount for your loan, it shouldn’t automatically mean that you’ll get it. You should determine how much of an impact it will have on your finances. Compute how much you’ll have left after budgeting for your daily, weekly and monthly expenses. You should also consider the cost of home ownership – the taxes, the insurance, repairs and the maintenance. After you’ve computed for this, you’ll know how much you have left to service your mortgage.
Another thing you can do to help soften the blow of that mortgage is to save up for a larger down payment on your dream home. Try to make a larger down payment if you can afford it. With a larger amount for the down payment, you’ll borrow less for the mortgage and, ultimately, it will be easier to pay off your loan. A bigger downpayment will also mean you won’t have to pay for mortgage insurance, which can still put a further dent in your wallet.
You should find out what your ratio is before you approach lending institutions. For example, for your front end ratio, the best move is to make sure that your house payment shouldn’t be over 28 percent of your monthly income. For your back end ratio, your potential house payment and the minimum payment for your other debts should not be over 36 percent of your income.
Finally, you should know what your closing costs are. You should be aware that there are other costs involved when getting your first mortgage – insurance, appraisal fees, home inspection fees, among others. Find out what the total cost of all these things are so you’ll know how much money you really need when closing out that deal on the house you want to buy.
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