When is the perfect time to buy a home? The answer to this question will depend on many variables. For many, it’s a recent wedding celebration that inspires couples to look into “for sale” homes in their dream community. There are also others who simply want to enjoy privacy, and are tired of having to share a home with roommates. Whatever your motivation is, you need to know the basics of home loans processing (including arizona home loans).
Before setting your eyes in mortgage application, here are pointers worth remembering:
- You need to remember that there is a huge initial investment when you apply for a loan. Although you are applying to borrow cash to purchase your home from a mortgage lender, you will need to cover upfront costs. There are initial payments that you need to take care of before closing. Make sure you have enough financial resources to cover for down payment, processing costs, insurance, and lawyer’s fees to name a few.
- Banks, credit unions, and mortgage lenders look at an applicant’s income-to-debt ration when before they pre approve a loan. This means that mortgage payments and other debts need to stack up against your income. Most lenders will use the 28/36 rule when approving a loan. The mortgage payments plus insurance should never exceed a homeowner’s 28% pretax income. All other debts should not exceed 36% of pretax monthly income. Once you have met these requirements, your lender will most likely give you preapproval for a loan.
Buying a home is more expensive than you think. Although your mortgage lender will facilitate the purchasing for you, you need to understand that balancing finances is more than identifying your monthly income and expenses. Apart from monthly payments for your mortgage and regular expenses, you need to consider other costs that may arise from getting a home loan approved including homeowner’s insurance payments, HOA fees, renovations, maintenance, and utilities to name a few. Make sure that you are financially ready and able to tackle all these expenses once your mortgage is activated.