So this is your first time to buy a home. Congratulations! This is a big step, and you are doing a great job of taking this step towards owning your first home. This journey doesn’t need to be difficult, especially if you have a mortgage company that can help you along the way. It is also beneficial for a first-time homebuyer to use a mortgage calculator to help you decide on how much mortgage you can afford to take out and how much you can afford to pay monthly.
Now that you have a mortgage calculator, you will notice that it will ask you to provide this necessary data:
- How much can you afford to pay?
- How much is the down payment that you can afford?
- Monthly expenses
- Credit rating
- Debt-to-income ratio
Once you type these in your mortgage calculator, you will know how much you will be paying for your mortgage every month.
The next thing that you need to think about would be the loan term and the interest rates. How long do you plan to repay this mortgage? Usually, the mortgage terms are either 15 years and 30 years. You may be tempted to go automatically for 30 years because you pay a lesser amount monthly. But bear in mind that the longer you take out your mortgage, the higher interest rates you pay in the long run. If you can afford to repay at a lesser time, the better it will be for you because you get to save more money.
Another important decision you need to make at this point is whether to take out a construction loan and then a mortgage. If you go for this option, you need to talk to two different loan officers and submit two sets of documents. One downside of this is that you are unsure if you will be getting a better deal in the long run. We would suggest that you go for a one-time close where you only submit your documents once.
Now that you have chosen your home, you know how much you are willing to pay, and how much you can afford to repay monthly, it is now time for you to sign on the dotted lines. This is what the home mortgage industry term as “closing .” Here you will finalize everything, and you would need to pay for the closing cost. Should you need to get more details about this, let us know, and we would gladly help you out.