Before You Begin The Task Of House Hunting…


Before You Begin The Task Of House Hunting…

The thought of purchasing a home, especially for first time home buyers, may seem like a daunting task. House hunting is a big job; but the sheer size of the loan itself to obtain a home is enough to give anyone butterflies in the stomach! If you follow a few simple guidelines, you can make working with your banker or mortgage lender to get you the loan you need to purchase the home you desire.

House with for sale sign in frontWhether you are working through a mortgage banker or another lending institution, here are a few guidelines to help you get started on the right path and not only avoid potential pitfalls, but also will be a great tool if you currently do not qualify for a mortgage loan.

Everything Starts with Your Budget

Before you even contemplate purchasing a home, you must examine your budget in order to fully understand what you can afford. After all, it doesn’t do you any good to go through the process only to find out at the end that the monthly payments are too high. Backing out at that point, especially after an agreement is made can have serious consequences to your ability to purchase a home in the future.

So, before you start looking to purchase a home, you should fully understand what you can afford to pay each month. Also, whether you can afford a 15 year or 30 year mortgage which means looking a bit into your future as well. This is vitally important that you do this work before talking to any lender so you’ll have a firm basis of understanding knowing what you have and what your limits are.  A good mortgage banker will help you determine what payment amount fits comfortably within your budget. They will be happy to break down payments on different loan terms for you.  Keep in mind, most mortgage institutions require a credit score of 640 or better in order for you to qualify for financing. It’s a good idea to get a grasp of your credit score now, because it can take some time to bring it up if need be. If you have questions about credit scores, click here and we will be happy to answer them for you!

Also remember that your budget should include more than just the mortgage payment. It will need to include the utility payments and all other expenses as well. Average the expenses, add them up and then subtract 10%, this should be the number you use to get the right loan. That 10% cushion will help protect you in case of rising costs or something you underestimated.

Shop for your Loans

You shop and compare for the vehicle you want, the same goes for your home loan. By shopping around you can find the best rate which may be well under your set budget. Be sure to include your local lenders. One thing we recommend is ask your potential lender to break down their fees (these items are usually included in your closing costs) prepaid items (taxes and insurance) and points paid that they may  or may not be including in the quoted rate. Many times lenders quote a crazy low rate (you may see these rates on commercials) but what they don’t tell you is you’re paying points and fees to receive this low rate. If you ask these simple questions, you will likely find that your best mortgage option is right in your home town! By doing this, you should find the right lender for the home you want.

Application Process

If you’ve followed our advice thus far, this step should be the easiest for you. Simply have all of your necessary documents prepared and ready for your meeting with your mortgage professional.  This will most likely include how long you’ve been at your job, the status of your credit, paycheck stubs, investment earning report and so forth. Your lender should let you know in advance what you will need at this initial meeting.  

Working with a mortgage banker will help you find the right type of loan for the home that you desire. Remember that the more you prepare, the better off you experience will be!

DISCLAIMER: Neither Indiana USDA Mortgages ( nor Luminate Home Loans is affiliated with any government agencies, including the USDA.

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