2019 and Your New Goals: How Much Mortgage Can I Get?
The first quarter of the year is gradually coming to an end. However, a lot of people are still struggling to own a house. Some have ‘all it takes’ to own a nice home nevertheless, the access to their new home is literally limited by ignorance. Are you ready to become a house owner? Do you want to liberate yourself from ignorance? This article was written with the best interest of potential house owners at heart. We’ve assembled the best mortgage calculating models, hints and steps. Just take a deep breath and keep reading!
5 things you need to prepare before calculating your mortgage
Evaluate your credit score
Your credit score is your financial reputation. The higher your credit score, the higher the rates you’ll get. Before asking “how much mortgage can I get?”, you need to request for your credit reports. There are three basic credit reports, namely; Equifax, Experian, and Transunion. As authorized by the US government, these three reports are available at www.annualcreditreport.com. You have the right to demand free copies of your credit reports every 12 months.
Study and compare mortgage rates
This is where the hard work lies. If you want the best rate, then, you’ve got to search for it. You can do this by reaching out to banks, mortgage firms, loan brokers and credit unions. Make sure you direct your queries to the appropriate quarters and present your financial reports, when necessary. Comparing various mortgage rates would give you an edge while negotiating and this would also help you identify the hidden extra costs.
Discuss your loan options with your loan officer
Most loan officers are always receptive. Walk up to your loan officer and make inquiries, as regards to your loan options. Work together with the loan officer to determine relevant data, like— down payment criteria, contents of a mortgage payment, special programs for certain segments of borrowers and locations, processing & underwriting sequences and timeline expectations.
Get a reputable real estate agent
The United States is filled with a lot of real estate agents. Getting a real estate agent is quite easy but make sure the agent is reputable and well-established. A good agent would help you get the house of your dreams with no stress.
Apply for pre-approval
Once you’ve got your credit score in good shape, all you need to do is apply for a pre-approval. Contact your loan provider for the necessary documents needed for a pre-approval. After getting your docs set, the next move is to go for an official underwriting. This process can only be initiated, if you’ve found a house of your choice.
How to calculate your mortgage
Before we can answer the question “how much would my mortgage be?”, we must firstly, understand the core basis of mortgage calculations. It all depends on your income, current debt, savings, and expenses. What is affordable to Mr. A. isn’t applicable to Mrs. B. That’s the major reason we recommend house budgeting for people who want to proceed with the home-purchasing process. There are two ways of determining house affordability; the 36% rule and the popular rule of thumb.
This rule is tested and trusted. The 36% rule states that no one should spend more than 30% of their gross income on any form of debt; for instance— home loans, credit cards, student loans, home insurance, medical bills, and others. It’s not advisable to apply for a home loan that’s higher than your budget. There could be an emergency, at any time; do not plunge yourself into modern-day slavery.
Rule of thumb
The rule of thumb states that all home buyers are expected to add three months of their housing payments and their monthly expenses. After adding your monthly debts and housing payments, the total value shouldn’t exceed 36% of your gross income.
Use a calculator, Input all the necessary figures into the calculator and it will display a budget value of how much home you can afford, according to your income, down payment and other expenses.
When you are ready to take this step make sure to ask as many questions as possible, this will save you thousands of dollars. Always check the US Mortgage regulations to make sure your lender or Real estate agent is not taking advantage of you. Thanks for reading.