If you are preparing to buy your first home, you may be mixed with feelings of excitement and stress. You may have grand dreams of finally living in your own home, but you may also be feeling stressed at the prospect of applying for a mortgage. By learning more about the mortgage process, you can more easily prepare yourself for what is to come.
Your Monthly Debt Payments Matter
One of the first things you need to know is that your monthly debt payments matter heavily. Even if you have a high monthly income, you may still not qualify for a high mortgage payment if your monthly debts are too high. This is because lenders review a debt-to-income ratio during the qualification process. You may consider refinancing some of your debt through a company like Saginaw Medical Federal Credit Union before you apply for your home mortgage as this could reduce your monthly debt burden.
The Combination of the Down Payment and Closing Costs Can Be Expensive
Another thing to keep in mind is that the combination of the down payment plus the closing costs on the mortgage can be expensive. Both down payment requirements and closing fees vary by loan program and by lender, so you can shop around to find a loan program that is affordable for you. However, you should still reasonably expect to pay several thousand dollars in closing costs. You may, however, negotiate to have the seller pay some or all of these fees for you.
Loan Rates Vary Significantly By Lender
Your loan rate will play a direct role in your mortgage payment as well as in how high of a loan you qualify for. Loan rates, however, may vary by a half a percent or more by lender in some cases. This may equate to a significant difference in your monthly payment as well as in the final loan amount you qualify for. With this in mind, shop around for the best combination rates, fees and down payment required.
If you are like most people, you may only apply for a handful of home loans over the course of your lifetime, and you understandably want to make all the right moves with your first home mortgage. Avoid making rash, hasty decisions when applying for a new mortgage. Always research your options, and take time to learn about different terms that may be new to you along the way. These tips will help you to be a more informed mortgage applicant.
About the Author: Lizzie Weakley is a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. In her free time, she enjoys the outdoors and long walks in the park with her 3-year-old husky Snowball. The information in this article is credited to Saginaw Medical Federal Credit Union.