When is the right time to purchase a new home?  Perhaps it is when the market conditions are just right or you have experienced a life change which will require a new purchase.  Regardless of the situation, there are a number of things to consider when thinking about purchasing a new home.

Do you have money for a down payment?  Most lenders will require a 20% down payment in order to qualify for a conventional mortgage.  That money can be from personal savings or from the sale of another property or asset.  If you are able to pay a larger amount down, you will save a significant amount of money over the life of the loan as well as cut down on your monthly payment.  There are loan types for some buyers which require a smaller down payment or down payment assistance.  As part of the prequalification process, consult with your mortgage banker on the down payment options that will work best for you.

Is your credit score as high as it can be?  While total loan amount and terms are key drivers in determining your loan type, credit score can also be a major factor.  If you considering purchasing a home and have not established credit, it is important to begin well before you start shopping for a home.  If you have a lower credit score, it will improve your overall monthly payment if you work towards raising your credit score before looking for a new home.  Once you start the mortgage process, you will want to keep your credit as is until the loan is complete.  Anything that you do to establish or improve credit should be done well in advance of the mortgage process.

Can you afford your monthly payment?  The three factors which will determine your monthly payment are the amount of the loan (including home price and down payment), length of the loan and the interest rate.  Negotiating a better price or bigger down payment can reduce the amount of the loan, thus bringing a lower monthly payment.  If a borrower can improve their credit score or qualify for specific loan types, they can reduce the interest rate which will result in a lower monthly payment.  If a term is longer, such as 30 years, it will result in a lower monthly payment than a 15-year mortgage.  It is important to note that a lower monthly payment due to a longer term will result in more payments over the life of the loan and more interest paid on the loan.  Other factors to consider in your monthly payment include Home Owners Association dues, taxes and insurance.

What are the market conditions?  It is important to understand the overall market conditions when looking to purchase a new home.  The easiest piece of data to find is inventory.  If there are more buyers than sellers it will be easier to sell your current home but you may pay a premium price for your new home.  On the contrary, if there is more inventory than there are buyers, you may have to be patient when selling your home.  However, you could be poised to get a better deal on your new home.  The market can change quickly based on interest rates.

If you have any questions or would like more information on the mortgage process click here or call 662-449-1296.

Getting a mortgage can seem like a complicated task.  You have to get approved for the amount, the house has to be approved and you have to go through the closing process, while still managing your financial situation.  Although there are many steps in the process, certain activities can further complicate the paperwork.  Here are a few helpful hints to make the mortgage process less complicated:

Keep Your Current Lifestyle

It is important to keep your financial life operating as usual during the closing process.  For instance, any major life change, such as a new job, will slow down or perhaps stall the process.  If you are planning a life change such as marriage or retirement, it is best to wait until after the loan process has been complete.  Mortgage lenders will need to see a history of consistent income, as well as tax returns in order to approve the loan.  It is also important to stay current on your accounts and pay them consistently.  This includes rent, credit card payments, car loans or any other standard monthly payment.  Lifestyle changes during the process could cause additional paperwork and will slow down the loan process.

Keep Your Credit Consistent

Making a major purchase such as a home might cause you to look at other parts of your financial portfolio.  Even though it may seem like a good idea to get your finances in order, perhaps credit card consolidation or paying off debt, it is not always helpful in the mortgage process.  When your credit is run during the approval process, that score and any open lines of credit are used to determine your loan approval.  If you would consolidate a credit card, or transfer debt during the process, this will cause that credit history to change, which will in turn require additional time to close the loan.  Other activities that could affect your credit score include a new store credit account, joining a new gym, getting a new cell phone, or anything else that would require a monthly payment.  Best practices suggest that you wait until after the loan process has completed to make financial decisions which will affect your credit score.

Work With An Expert

Getting a mortgage loan is one of the biggest financial transactions in your lifetime.  It is critical that you work with an expert to help you through the process.  Your mortgage lender can provide assistance in making sure you get the proper rate for your situation and that you will be able to afford your home for years to come.  They can also answer questions you may have as it pertains to the closing process, taxes, insurance and other aspects of the process of financing your home.  Your mortgage lender is there to help you complete the transaction and secure the financing for you purchase.

If you have any questions or would like more information on the mortgage process click here or call 662-449-1296.