Everybody loves talking about mortgages. Theyre fun, easy to understand, and a great icebreaker, right?.Wrong. Thanks to their lengthy process, technical jargon, and confusing options, mortgages have a bit of an intimidating reputationbut it doesnt have to be that way!
If youre in the process of buying a new home and dreading the mortgage application process, heres what you need to know to keep things running smoothly.
If youre feeling antsy about getting started and want a general idea of how much loan you might qualify for, consider the 28/36 rule, or the Debt-to-Income ratioAKA what most lenders use to help calculate your mortgage.
Essentially, the 28/36 rule means that your monthly mortgage payment shouldnt be more than 28% of your gross income. Additionally, your outstanding debtslike mortgage, car loans, student loansshouldnt account for more than 36% of your gross income.
Not seeing the numbers you were hoping for after calculating your Debt-to-Income ratio? Then, hopefully, youve given yourself a little time to shift things in your favor. Paying off loans, improving your credit score, avoiding big purchasesthese will all help you change those numbers.
Of course, completing those tasks is a little harder to do in practice than in theory, so you may have to take a look at your budget and see where you can cut out some extrasat least temporarily!
In the weeks before you plan on applying for a mortgage, you should start collecting all of the documents you need. Since a lender will be telling you exactly how much money theyre willing to loan, theyll need a comprehensive understanding of your finances beforehand. Start gathering things like:
Depending on the lender you choose, you may need additional documents, so consider calling in to double-check beforehand.
Once its time to start thinking more concretely about applying for a mortgage, you have several options to consider. While all the mortgage options out there could easily fill a whole blog post on their own, heres a quick rundown to give you a general idea:
These arent the only options youll have, just the most common. If none of these sound right or you arent sure which to choose, just ask your lender!
When it comes time to decide who to work with, youll have to do your research. Each lender is different, meaning theyll likely offer you different rates, charges, and loan options.
Luckily, weve been working in real estate around the area for years, so we know exactly which lenders are right for which buyers. If you need a few suggestions before you kick off your search, just let us know!
Thats okaywe get it. Applying for mortgage is confusing and challenging, especially if its your first time. If you have any questions about the process, were here to help.
Ready to start looking at a few homes in your price range? We can help with that, too! Check out our specialized search tool to narrow down your options, and give us a call to start seeing a few in person!
The post Mortgage 101: What To Know Before You Apply appeared first on Fort Bend County Real Estate, Lifestyle and Home Maintenance Blog.