Are you planning on buying a home in the near future? Those who are considering moving out of an apartment and into a home should get their financial information together as soon as possible. Getting a mortgage and finding a home that you like takes a lot of work and attention to detail.
What Do You Need To Get A Mortgage?
The first thing that you need to do is take a look at your debt as a percentage of your income. Those who have a debt-to-income ratio of more than 40 percent are rarely going to be approved for a loan. Exceptions can be made for those who enroll in government programs or find lenders that are willing to overlook a large debt load if circumstances allow for it. Once you have your debt situation under control, you need to collect recent tax returns and income statements to help verify your income and debt.
How Much Can You Spend?
How much can you spend on your first house? That depends largely on how much you make and how much debt you have. In general, your housing payment should be no more than 25 percent of your total income. Other sources say that your home should cost no more than 150 percent of your yearly income. However, you should never spend more than you would feel comfortable paying each month. Those looking for a home should factor property taxes and insurance to determine how much your mortgage will be each month.
Fixed Rate Or Variable Rate?
Borrowers who are shopping for their first mortgage are likely to get a variable rate mortgage. This is due to their lower credit scores and shallow credit history. If you have a credit score over 740, you may be eligible for a fixed-rate loan regardless of other factors in your credit profile.
It is important to know as much as possible about getting a mortgage before you start shopping for one. If you need help getting a loan, you can look to organizations such as Homestart to get assistance with your down payment and other costs related to your mortgage.