8 Steps to Buying a Home
How much home can you afford?
What you can afford depends on your income, monthly expenses, down payment, interest rate and credit rating. Lenders typically require that your monthly mortgage payment be no more than 28% of your total monthly income. Also, your entire monthly payments including mortgage loans, car loans, credit cards and others should be no more than 36% of your monthly income.Real estate experts tell home buyers that it's critical to apply for a loan before shopping for a home, and it's true – this is an essential step. But do you know that it's far better to be preapproved for a loan than to be prequalified?
There other advantages with preapproval. It means that you can:
- Save Time by Looking at the Right Homes
Your real estate agent can show you homes that you can afford and are qualified to buy. - Spend More Time Examining the Right Homes
By decreasing the number of homes you look at to those that fit your budget, you can give more time to thinking about all the things each home has to offer to fit your specific needs. - Gain Confidence & Avoid Disillusionment
When you find that perfect home, nobody can tell you that you are not qualified to buy it. You can minimize anxiety and remove last-minute loan surprises that could disqualify you. - Enjoy a Faster Closing Period
Because there is no window period while your loan application is processed, the lender can speed up the entire processing procedure.