The only way to truly know how much home you can afford is to ask a lender. Getting pre-approved lets you know how much you can afford before shopping for your home.
What to Know:
- Income: Stable income assures a lender you can make your monthly mortgage payment.
- Debt: Add up auto payments, credit card payments, student loans, alimony, child support, and other debt.
- Cash: Total assets, amount in checking and savings accounts, and other investments.
Determine Monthly Mortgage Payment Including Escrow.
Escrow is a third party account used to retain funds including the property owner's real estate taxes and hazard insurance premiums. Escrow is only applicable in certain loan programs.
Understand Bills Associated with Homeownership.
Estimate that it will cost about one percent of the purchase price per year to maintain your home. For a $200,000 home, you should budget approximately $2,000 per year or approximately $170 per month for maintenance. Condominiums and co-ops will have regular maintenance fees. You will also have utilities, gas, electric, water, sewage, cable, telephone, insurance, property tax, etc.
Establish Future Priorities and Plan for the Unexpected.
- What are your needs for the new home - furniture, lawn equipment, barbecue grill?
- Do you plan on a new car in your near future?
- Do you plan to have children?
- How long can you survive if you lost your job?
10 DO's AND DONT'S
- Don't apply for new credit of any kind.
- Do keep all existing credit card accounts open.
- Don't MAX OUT or overcharge existing credit cards.
- Do maintain your employment at your current job.
- Don't consolidate debt to one or two cards.
- Do pay off collections, judgements, or tax liens reported within one year.
- Don't make any large purchases.
- Do stay current on your existing accounts.
- Don't make any large deposits into any of your accounts.
- Do call us. We are here to help you through this process.
- Use this checklist to make sure you have everything you need before you begin your loan application. Having all necessary documentation up front saves time so your loan can close smoothly and quickly.
- 2 years of tax returns.
- 2 years of W-2s.
- If self employed, 1099s and copy of business license.
- Most recent bank statements (all accounts and all pages).
- Explanation (signed and dated) of any deposits over $1,000 other than normal pay into accounts.
- Most recent pay stubs (minimum of 30 days).
- Copy of driver's license.
- Explanation (signed and dated) of any inquiries on credit report.
- Mortgage Statement, Insurance Declaration Page, and most recent tax statement for all other properties owned.
- Divorce Decree and Separation Agreement (if applicable).
- Copy of Earnest Money Check & Purchase Contract.
Buy and begin building your own equity. Rates are at an all time low, and we are confident there is a program that is perfect for you. The benefits are endless!
- You can't build equity in an apartment or rental property, but by owning your home you can!
- Your rent payment is not tax deductible. By being a home owner the interest portion of your mortgage payment could be tax deductible. *Please consult your tax advisor.
- Your rent almost always increases when your lease is renewed, but with a fixed-rate mortgage, the principle & interest payments never go up.
- In addition to deducting mortgage interest, you may also be eligible to deduct costs paid at closing. As part of owning a home versus renting, you may be eligible for tax credits for improvements and other tax incentives.