Diving into homeownership can be daunting! Real estate terms, financing requirements, attorney emails, inspection reports… it can be dizzying! Let's dig into 3 of the most common homebuyer questions I receive to make the process feel a little more manageable:
How much house can I afford?: The first step in any homebuying transaction should be a conversation with a loan officer. You will provide them with some financial documentation and they'll analyze your debt to income ratio, employment history, income, etc. to determine what you qualify for. Once you have a pre-approval, your realtor can tailor your home search so you're *only* viewing homes in your budget. There's nothing worse than falling in love with a house you can't afford!
One helpful thing to keep in mind, homeownership might be more affordable than you
think! For example, contrary to popular belief, you don’t need a 20% down payment to
qualify. Talk to a real estate agent and understand your options so you can get in the
game and start gaining equity.
2. What determines my mortgage payment? For most people, there are four
components to a mortgage payment:
- Principal: Principal is the money that you originally agreed to pay back.
- Interest: Principal is the money that you originally agreed to pay back.
- Taxes: In some instances, your real estate taxes might be rolled into your monthly
mortgage payment in an escrow account.
- Insurance: Homeowner’s insurance is required protection you must maintain to
protect against home damage. And mortgage insurance (PMI) protects your
lender and whether or not its required is determined by your down payment.
3. What are the current interest rates and how do they impact me? Interest rates
change daily! Your rate will depend on your credit history and your loan type. If you
want an idea of current rates, or to see how rates will impact your payment, it’s best to
talk specifics with your loan officer and realtor.
Stay tuned for more homebuying Q&As in the future, and if you have any specific ones--please don't hesitate to reach out!