Buying a home is probably the single largest investment
most people will make in a lifetime. By preparing yourself
and your finances for a home purchase, you can ensure a
smooth home-buying process.
Start by checking your credit
To have an opportunity to get the best possible mortgage,
make sure your credit history is clean and accurate. Start
checking your credit profile at least a few months before
the house hunt.
Make sure the information is correct and dispute any
problems you discover.
For an understanding of your credit history, check your
credit profile.
Figure out how much home you can afford
The rule of thumb is that you can afford a residence that
runs about two-and-one-half times your annual salary. Most
banks insist on the following:
Your monthly housing costs (including mortgage principal
and interest, property taxes, homeowner's insurance and
private mortgage insurance) should equal no more than 28
percent of your gross monthly income.
That sum (plus your minimum monthly payment on any
long-term debts) should equal no more than 36 percent of
your gross income.
Understand the Elements of Home Financing
Down Payment - This is the up-front money you pay toward
the home. The more money that you can allocate to the down
payment, the lower your mortgage will be (saving you in
interest over the life of the loan).
Types of Mortgages - The principle amount and the interest
will determine your monthly payment schedule. The typical
mortgage is for 13-30 years and falls into two categories:
a. Fixed Rate A fixed rate mortgage consists of a set
monthly payment that remains constant throughout the life
of the loan. The interest tends to be a bit higher on fixed
rate loans.
b. Variable Rate Mortgages (VRM) Variable Rate Mortgages
give you a lower initial interest rate with the risk of it
rising in years to come - The advantage being the chance
that the interest rate could decrease. A cap of around
5%-6% above the initial rate protects you from extreme
jumps in interest rates.
Closing Costs - These are the costs of borrowing money,
establishing the loan, and preparing all of the
documentation for the sale. This cost can be significant,
so make sure and plan for them. Buying a home can be one
of the best investments you can make. With each monthly
payment, you are building equity in your home.
Enjoy the powerful benefits that pride of ownership brings.
Your home will give you and your family a wonderful feeling
of stability as you become a part of your new neighborhood.
----------------------------------------------------
Since 1999, TransUnion's TrueCredit has helped millions of
consumers successfully manage their credit. Through a suite
of educational materials, free monthly newsletters and
easy-to-use products, http://www.TrueCredit.com empowers
consumers to achieve greater financial well-being.
TrueCredit.com's online products include credit reports,
insurance and credit scores, credit monitoring, debt
management tools and identity theft insurance services.
No comments:
Post a Comment