Resources and Services
Consumer Guides
Mortgage Hints
Don’t build yourself a mortgage mountain. It’s fine to want the best home you can afford, but be certain that it is comfortable affordability. Although you may find certain mortgage lenders who will stretch your qualification ratios (the ratio of your total mortgage payment to your total income) the traditional ratios--the mortgage payment as 28% of your income and the total of your mortgage payment plus your monthly debt payments as 36% of your income--are good basic guidelines.
Get your budget under control. Spending some time reviewing your budget (or developing one if you don’t already have it) and sharpening your money saving skills can bring big rewards later. A coordinated budget allows you to get the most home for your money without strapping yourself while eliminating wasteful spending.
Prepare to pay off small debts. Having 3 credit card balances, for example, one with a $125 balance, a second with a $165 balance and a third with $275 balance will only cloud the picture. Even though the total is only $565, all 3 will have minimum payments, credit lines, etc. If possible, prepare to pay them down to $0 balances.
Begin to gather documentation. It is not necessary that you have all items on hand before you apply, but there are a number of documents you will need eventually and the approval process will go much smoother if you begin to gather them now. Examples: W-2’s and income tax returns from the last few years (especially if you are self-employed), copies of pay stubs, a copy of your credit report (you can get a free copy of your credit report here), records of any child support or alimony (either going out or coming in) and bank statements for all accounts (checking and saving) for the last several months.
Don’t forget about closing costs. In addition to your downpayment, you will need to reserve funds for closing costs. Depending on the type of loan and your location, these costs can range from 3-5% of the mortgage amount, will be paid in cash at the closing and cannot be borrowed funds.
Compare. There are lots of sources for mortgage funds--be sure to make comparisons. Your local bank or credit union, mortgage brokers and Internet resources are all available. Be certain to compare equal terms, downpayments and loan types.
Consider points when comparing. Your total mortgage cost will be determined by 3 factors: The interest rate, the term and the amount of points.
Consider a 15 or 20 year term. Many home buyers make the assumption that a shorter term will boost their payments out of reach. Unless you make the comparison, though, you may never know if a 15 or 20 year (if available) term could have been affordable. See a comparison of a sample loan. If you are concerned about committing to the higher payment of a shorter term, try this tactic: Mortgage the home with a 30 year loan but have the lender develop a 15 and a 30 year amortization sheet for you. Then, do your best to pay the mortgage at the shorter term payment. It will do wonders for your equity position!
This article courtesy of The Home Buyer’s Information Center, a complete guide to buying a home. 2002
More Popular Entries
Additions & Remodels
Soundproofing Techniques
Small Kitchen Projects Can Make a Big Difference
Easy Financing Options for Remodeling
Agents (Real Estate), Appraisers & Home Inspectors
Home Inspections
The Final Walk Through
Townhouses
Appliances
Installing Appliances
Selecting Major Appliances
Repair Dishwasher and Water Damage
Builders (New Homes), Architects & Designers
Conventionally Framed Home Builder
Checklist: Preventing Builder Fraud
Workout Room
Carpentry & Cabinets
Tip: Dealing with Dryrot
Cabinet Options
Tip: Repair Laminate Countertops
Cleaning Services
The Importance of Air Duct and Vent Cleaning
Prevent Wear with Fabric Protection
Ways to Clean Your Carpet
Concrete, Brick & Stone
Installing Concrete
Tip: Repair Concrete Steps
Wunderbar Rebar!
Consumer Guides
Time for a New Roof?
Preparing a House for Sale
Upgrading Your Electrical System
Design Ideas
Drywall Textures and Styles
Prefinished vs. Unfinished Wood Flooring
Asphalt Shingles: The Wood and Tile Alternative
Electrical, Telephone & Data
Whole House Fans
Tip: Repair Home Entertainment Equipment
Convenient Electrical Fixtures
Expert Advice
Install a Front Door
Insulating a Crawl Space
Air Quality
Flooring
Hardwood Inlay
Cleaning Hardwood Floor Inlay
Steam Cleaning Grout
Handyman Services
Avoiding Home Repair Rip-offs
Some Assembly Required
The Benefits of Weatherstripping
Heating & Cooling
Tip: Types of Geo Thermal Heating Systems
Heat Pumps
Environmentally Friendly Solar Heat
Home Construction
More Return on Your Home Improvement Investment
Tip: Panelized Homes
Do Homework Before Building a New Home
Landscape, Decks & Fences
Asphalt Paving
The Attention Your Landscape Needs
Preparing Your Yard for Winter
Moving & Storage
Some Assembly Required
Preparing a House for Sale
Stowing it Away: Where to Put It
Other Services
Tip: Fire Protection or Prevention
Simple Ways to Keep Your Children Safe
Wet Basements
Painting & Staining
The Right Tools for Interior Painting
The Basics of Interior Painting
Checklist: Interior Paint Prep
Plumbing
Safe Drinking Water
The Importance of Clean Water
Find a Water Treatment Service
Quick Tips
Tip: Cleaning Fireplace Burns
Tip: Repair or Maintain Sprinkler Systems
Checklist: Basic Lawn & Landscape Care
Roofing, Siding & Gutters
Install Roofing Snow Melt Protection
Install or Replace Flat Roofing
Modern Roofing Options
SP Feature Article
The Internet Will Change the Buying of Services
Walls & Ceilings
Techniques for Wall Covering Removal
Create a Turn-of-the-Century Look With Metal Ceilings
Acoustic Ceiling Cleaning
Windows & Doors
Basic Door Lock Information
Installing the Correct Blinds or Shades
Choosing Between Blinds or Shades