Thursday, January 5, 2012
12 Steps To Buying A Home - Installment 1
Step 1: Go shopping for a mortgage. It may seem backwards to shop for a mortgage before you shop for the house, but there are several reasons for doing this. First, you’ll find our how much you can borrow, which has a lot to do with how much house you can buy. Be careful not to let the lender you push you into a monthly payment you don’t feel comfortable with. There are no “rules” here – only you know how much you can comfortably handle.
It’s okay to be a little stretched, at least at first. Most people “grow into” their mortgage payments. But it’s also very easy to get in over your head. Stay away from “alternative” loans – like interest only mortgages. If the value of the house goes down after you buy it (not unreasonable in today’s market) you’ll end up owing the bank more than the house is worth.
Shopping for a mortgage will also help if you can get “pre-approved” for the amount you’d like to borrow. This means the lender has looked over your credit and financial statement and agreed to lend you the money. Sellers like pre-approved buyers because there’s less risk the deal won’t go through.