Friday, November 14, 2014

Financing And You

Buying a new home is one of the most exciting points in one’s life, but can appear to be an overwhelming task. Having knowledge of the process is key, and getting familiar with all the procedures, rules, and lingo takes time but is not impossible to figure out. Become familiar with terms that are associated with financing (binder, earnest money, graduated payment mortgage, etc.) The National Association of Home Builders has a great resource known as the “Home Buyer’s Dictionary” that includes those terms and many more. Not all will apply to your situation, but most you will find relevant and will allow you understand exactly what the numerous legal papers in your future are saying.

It can’t be stressed enough for you to determine exactly how much you can afford to pay on a monthly basis. A home has numerous fees involved on top of living expenses such as water, food, gas, etc. In addition to monthly insurance and property taxes, you will have monthly interest and principal to pay. It is important to realistically estimate what you can afford and stick to it. Don’t let anyone sway you from you determined amount either. There will be temptations, but hold fast and refuse to buy anything above what you can afford. Another important tip that falls in this category has to do with monthly debts. At this point, you have already taken into account your monthly expenses. Before you close on your home, try and reduce those monthly bill payments. This will not only look better for lenders, but will also give you more reserve cash for when you need it.

Once you’ve got a good grasp of the finance process, it is time to get preapproved for a loan. This preapproval doesn’t guarantee you’ll get financed, but will give you a good idea as to whether or not you will be approved and is a major step on the road to home ownership!

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