Mortgage Step by Step

You have decided that purchasing a home if the right thing to do, now what ? How much can you afford, how do you obtain that financing you need. Before you shop set up a game plan. Determine the must have features of the home, start keeping good records of employment and expenditures, rent payments.

Set realistic goals of what you can afford. Review monthly spending plan to identify non-essential spending. If you have been saving continue doing so. Calculate the maximum monthly payment that you could make. A good rule of thumb is to multiply you gross income by 2.5 this is the top purchase price.

The next two steps go hand in hand start talking to a mortgage consultant who will help explain the different type of loan options available, and who will help you choose which one is right for you. In choosing a mortgage consultant (mortgage lender) talk to friends and families to find representative whom they have worked in the past and are happy with, or who they had a pleasant experience. A good place to start is your current local bank. Interview a few individuals to determine what loan options are available with their company.

Once you have chosen a lender that you would like to work with get pre-approved for a loan. A pre-approval involves meeting with the lender and providing financial information to them such as pay stubs, tax returns and any other pertinent financial information. They will also check your current credit score, which why this step needs careful consideration you do not want to have many lenders access you credit as it could affect your loan options.

A few words of caution, be aware that there is difference between a pre-approval and a pre-qualification. For a pre-qualification a credit report might be the only item used which will not help determine how much you can afford. Beware of predatory lending, if it sounds to good to be true, it probably is. Companies are in business to make money. In our current economic environment will be safe to say look at financial institutions such as banks, as they might offer more loan options, and have set very specific guidelines as to what type of borrower they are looking for.