Are you ready to buy your first home? Taking the steps to buy a home is exciting but it can also be scary if you don’t know what to expect. Take a look at these tips to avoid making common mistakes that could end up putting your new home loan on hold!
- Not Knowing How Much You Can Afford
A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. If you don’t already have a monthly budget, take a few minutes and list all of your monthly expenses (not including how much you are currently spending on rent) including your car payment, credit cards, student loans, health insurance, etc. Next, subtract that amount from your paycheck amount and you’ll know about how much you can spend on a new home each month. Knowing what your price range is for a new home can prevent the frustration of falling in love with a home that you can’t afford.
- Not Getting Prequalified For A Mortgage
Mortgage pre-qualification means that a lender has reviewed your income to give you a general idea of how much you can borrow for a new home loan. While this does not guarantee that you will receive a mortgage loan, it’s a good place to start. Shopping for a new home without preapproval would be like going to the grocery store without your wallet. Pre-qualification will give you an idea of what price range you can shop in and it paves the way for the next step in the mortgage process: pre-approval.
- Not Choosing The Right Lender
One of the most complicated decisions you will likely make concerning your home mortgage will be which lender to choose. Today there are many mortgage lenders eager and ready to accept your loan application. But just because a lender accepts your application doesn’t mean it’s the right deal for you.
Before you begin the prequalification process, make sure to shop around and compare financial institutions that offer mortgage loans. Commercial banks aren't the only financial institutions that originate mortgages – credit unions like Palisades Credit Union can too!
At Palisades Credit Union we strive to help our members finance the home of their dreams. We understand that finding the right home and mortgage sets a solid foundation for successful homeownership. Whether it’s your first home or a refinance, our representatives will walk you through all the steps.
The Bottom Line
Being a first time homebuyer may seem stressful and overwhelming at times but knowing what to expect and working with a mortgage lender with your best interest in mind can make the process much easier!
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