You’ve done it; you’ve made the decision to buy your first home! However, you want to make sure you don’t rush into anything. You want to make sure you navigate the process correctly and don’t get yourself into any financial trouble. Here are some of the best mortgage payment tips to help you find the right mortgage, payment amount and interest rate for your situation!
- Evaluate Your Finances: How are you going to know what payment you can afford if you don’t take a look at your budget? Sit down and evaluate your current monthly payments, discretionary spending, expenses and more to determine how much monthly payment you can afford. Try to cut spending in unnecessary areas to prepare for your new mortgage payment as well.
- Pay Off Personal Debt: Lenders determine how much you can afford by looking at various income to debt ratios. It might be a good financial move to pay off some of your existing debt to lower these ratios.
- Check Your Credit Score: Your credit score plays a huge role in whether or not you get approved for a mortgage and what interest rate will accompany your mortgage, which impacts the amount of your monthly payment. Make sure you’re making payments on time and handle any issues with your credit prior to applying for a mortgage.
- Calculate How Much Down Payment You Can Afford: Apply to get pre-approved for a mortgage before entering the real estate market. This can be done with the help of a mortgage lender you are comfortable with. Getting pre-approved is essential in order to know how much financing you qualify for and show sellers that you are serious about purchasing a home. Pre-approval makes working with a realtor much easier, as they will know the price range of the properties you qualify for. From there you and your lender will determine your necessary down payment, your monthly payment amount and what payment options you have.
- Get the Right Mortgage: There are a multitude of mortgage options and products, and you need to make sure you find the one that is best for your specific situation. Both fixed and variable rate options are available to you. Work with a trusted lender to browse their portfolio of mortgage products to identify what best fits your situation. The amount of your down payment could have a significant effect on your monthly payment amount. The right loan means you are comfortable making that payment and you do not feel over-extended.
- Pay Extra When You Can: You’d be surprised how much less you can pay on a 30 year mortgage by making only one extra payment per year. If you have the ability to pay extra towards your mortgage, it might be a great idea!
By using these mortgage payment tips, you will be able to navigate the mortgage process and make sure you get the right loan and monthly payment for you. For more information about mortgages and buying your first home, download our eBook now!