You might be at a point in your life where you feel the next step for you is to purchase a house of your own. There are certain advantages to owning your own home, but there are also a lot of responsibilities. Buying a house will most likely be the single biggest investment you ever make, so you should be prepared for the financial responsibility associated with this purchase.
Determining What You can Afford to Spend
The first step in purchasing a house is to create a plan detailing what your expenses will be. This plan will begin with the amount of money you earn every month and how much you have in savings. This will tell you how much money you have available for a down payment and how much your will need to borrow. When determining what your monthly payments will be for a mortgage loan, most financial advisers at https://myfinancesg.com/ recommend purchasing a home that costs no more than two and a half times the amount of your yearly salary.
Obtaining Information about a Mortgage
You might not be aware of the fact that many lending agencies will pre-qualify people for a mortgage loan based on general information. This step can let you know if you will be considered for this type of loan. To take this process one step further, you can get pre-approved. Pre-approval is given once the agency knows what your income is and what you will be able to manage as your payment. A pre-qualifying estimate is not a guarantee of receiving any money, but a pre-approval gets you started with the mortgage process.
When you apply for a mortgage loan you will need to provide information about your income and all of your assets. A mortgage lender, like any other money lender, will run a thorough check on your credit history. To avoid surprises it is a good idea to obtain a copy of your credit history beforehand. If you operate your own business you will need to provide documentation as to how much money you brought in over the past year.
There are no set rules as to how a mortgage is scheduled. Most lending agencies offer several options for the mortgages they provide. The two most common schedules are those with fixed rates and those with variable rates. A fixed rate mortgage is good for people who do not expect any changes in their income within the future. The variable or adjustable rate works well for first time home buyers who want their initial payments to be lower.
Don’t Forget to Include the Closing Costs
When figuring out what you can afford to spend buying your new home, don’t forget the fees associated with the purchase. If you have the home appraised or inspected, you will need to pay for these services. The same is true if you have a lawyer look over the documents associated with the sale of the house. With more couples getting divorced, it’s a good idea to run a title search to make sure no one else has a claim to the property. Additional costs to consider include property taxes and the cost of filing your purchase with the county clerk’s office.