People love to say that there is more involved with buying a home than just money, and while this is indeed true, you cannot buy a home without it. When thinking about real estate and purchasing a new home an important first step is securing a mortgage. Before even stepping foot in a lender’s office take a good hard look at your finances.

Examine your household’s income and expenses and determine what you are capable of paying each month. Affordability has been calculated at a mortgage being 30% of your monthly income and a mortgage that swallows up over 35% of your monthly income is seen as unaffordable.

Be prepared when you approach a potential lender and check with at least three different lenders. Not every lender will offer the same deal. It is important to read between the lines and look at other costs involved. There might be closing costs, points to pay down, hidden fees, etc., do some research and read the fine print.

The more traditional mortgages are 15 and 30 year fixed rate loans. A 15 year loan will typically have a lower interest rate and obviously a shorter time to pay off the loan but will involve higher monthly payments. A 30 year fixed loan spreads the payments over twice the number of years and will have a higher interest rate but lower payments. If a traditional loan doesn’t fit the bill there are many creative financing options available, many unique to a particular situation.

While money isn’t everything but it is an important first step to buying a home. Click here to read an article from Yahoo Finance on the basics of mortgages.

 

Contributed by Mario Romero, CRS, CDPE, CLHMS
602-252-4191 office, 602-254-9810 fax
The Romero Team - Melcher Agency
www.TheRomeroTeam.com
www.ShortSaleTeamAz.com
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