The spring season is one of the most popular times to buy a house. If you are thinking about making your first home purchase, one of your initial steps will be to contact a mortgage lender to get pre-approved for a loan. To get ready for the process, gather some information and make some calculations.
Calculate Your Income
Before contacting a mortgage lender, get together at least two weeks worth of pay stubs or income information. The figure you need to work with is your gross monthly income, the figure before taxes are deducted. If you are self-employed or work as a contractor, you will need the returns from your last two years' tax filing.
Determine Your Debt Load
The less debt you have, the larger mortgage you can afford. Add up your recurring monthly payments to determine the amount you owe and divide it by your income. If this ratio is under fifty percent, you should qualify for a loan, but the lower the ratio the better. If it is over fifty percent, consider paying off some of your debts before looking into home financing.
Examine Your Credit Score
Another important number in these calculations is your credit score. Contact one of the credit reporting companies to get a credit history and a report of your score. Carefully check over the credit history to determine if there are any errors or problems that may need to be fixed before you apply for a home loan. Next, look at your credit score. If it is 700 or above, you should have no trouble getting pre-approved for a mortgage. If it is under 600, you can still get home financing, but you will need to apply to a special program like FHA. The experienced professionals at Sun West Mortgage Company can help you find a lender for special circumstances.
Figure Out Your Down Payment
A down payment on a home is typically ten to twenty percent of the sale price. It is a good idea to make a larger down payment on a less expensive home than a smaller down payment on a more expensive home in case the real estate market goes down instead of up.
Decide What You Are Looking For
Your final decision is how much house you can afford. When you calculate your monthly mortgage payment, include taxes and insurance in the figure. These can add up and leave you strapped for cash if you don't take them into initial consideration.
Starting the mortgage approval process can be scary, but it is your first step to owning your very own home. Finding a professional you can trust will set your mind at ease.
