Financing Your Home

Buying your first house can be very exciting. But financing your home purchase can be a daunting experience. In both cases, do your research and shop carefully to ensure you find exactly what you want and need.

Deciding how much to spend on your home and which type of mortgage will work best for you — as well as understanding the settlement process — can be confusing. However, there are many sources that can help you get prepared well before you step foot into a sales office, show home or open house.

  • Get familiar with the lingo.

  • Figure out what you can actually afford to pay on a monthly basis. Remember that, in addition to the monthly principal and interest, you will also be paying for property taxes, insurance and possibly a homeowners’ or condominium association fee. You have more knowledge about your living expenses than a lender. Hold firm with that number and don’t be tempted to agree to an amount higher than what you are comfortable spending. Mortgage calculators are a great way to figure out what your monthly payments would be based on interest rates and down payment amounts.

  • Pay down your debts. Debt that you carry on your credit cards will limit what you qualify for from a lender.

  • Attend a first-time home buying seminar or talk to a credit counselor who does not work for a lender. You can research your options without being influenced by someone who has a financial interest in the home or loan you choose.

  • When you have done your research and are ready to move on to the next step, visit a lender, understand the loan choices that would be available to you, and, once you’ve determined the most suitable loan, get pre-approved for that loan. Since you will already know how much money you can borrow, you will know what price range you should be looking at and can move quickly if you are bidding on a house that has several interested buyers. A lender’s pre-approval would still be subject to a final verification of your credit and a satisfactory appraisal, but it’s a big step toward becoming a home owner.