If you feel like you are in a financial state that you can purchase your own home, and you aren't sure how to go about it or when to start looking, you first need to focus on getting a home loan. Getting a home loan can be a long process, but it's because the mortgage lender wants to make sure that you are prepared for the financial responsibilities of a mortgage. Here are some of the things to know when you start shopping around for home lenders and comparing interest rates.
Don't Look at Houses Until Pre-Approved
Don't start looking at houses until you get pre-approved. You want to make sure that you are approved by a mortgage lender, and that you have a rough estimate about how much you can spend and if you can get approved for a loan. Get the pre-approval from a couple of lenders, or find out if you have things to work on before you can get the loan you need.
Get Your Debt in Order
You have to get control your debt, and you want to get your debt to income ratio down to less than 30 percent if you want to get approved for a home loan. Look at small debts you can pay off right away, this will also help to improve your credit score. Once you have your debt reduced, you can feel more confident applying for a loan.
Have the Money Saved
You want to start saving money and put money away for a few different things. These things would include for:
- Down payment
- To avoid PMI
- First years homeowners insurance
- Have three house payments in the bank
You want to put enough money down to avoid PMI if you can, and you also have to pay for your first year of homeowner's insurance up front. The mortgage lender will also like if you have backup payments in your checking or savings account.
Talk with the different mortgage companies to see what they require for your down payment, what interest rate they can offer you, and to see if they can give you the amount that you need to get the home that you want. There are a lot of mortgage companies out there, but not all are the same. Take the time to find the lender that wants to work with you, and then move forward finding a home. To learn more, contact a company like AFFILIATED MORTGAGE LENDING.