Your experience as a first time home buyer may be exciting mixed with a bit of uncertainty. It is exciting because you are finally becoming a proud homeowner and uncertain because you have lots to do before you can finally get the keys to your dream home. So, you want your journey to your dream home to be hassle free and with least number of hiccups.
In order to achieve this you have to do your bit of homework. This includes being thorough with your finances. Your income should be steady so that your income can support the monthly mortgage payments.
It is a well known fact that the subprime mortgage crisis was triggered by irregular lending practices and manipulation of appraisals, income levels etc. So, it is very important that the lender you choose should be reliable and shouldn’t take you for a ride.
So, what are the factors that you need to take into account as a first time home buyer?
- The interest rate
- Your affordability
- How long you can afford to make payments
- Do you have a good debt-to income ratio?
How will the above factors affect your home buying experience? Let us review them one by one to find out the same.
The interest rate – It is one of the factors that will determine how much you will be paying for the next couple of years till the time you don’t pay off your mortgage. So, it should be decided taking that factor into account. This is because whatever you decide upon now will be affecting your finances for the entire loan term. You can opt for FRM when your monthly mortgage payments will be fixed or ARM when your monthly mortgage payments will be fluctuating as per market conditions.
Affordability – It is important to live within your means. There have been instances when individuals buying cars bought very expensive ones but thereafter didn’t have enough for the gas. So, take out a mortgage that will be within your reach and will enable you to pay off your mortgage without having to strain your pocket. However, don’t make use of your entire paycheck for the mortgage payment.
How long will you be able to make payments?
You can take out a mortgage for 15-years or 30-years. It depends on whether you want to build equity in your property fast or you want your monthly mortgage payments to be low. If you want equity to build up in your property fast, make higher payments each month and opt for the 15-year loan term.
On the other if you prefer to make lower monthly payments, opt for 30-year loan term and hence higher interest rate.
DTI – If your debt-to income ratio is good (28/36 is considered standard in most of the cases) you stand a better chance to take out a mortgage as per favorable terms.
You can make use of the different mortgage calculators that can help you to find out your monthly financial obligations. There are many websites that offer online mortgage calculators for free.
Useful Sites:
Ashburn VA Luxury Homes for sale and Leesburg Virginia Luxury Real Estate – For Leesburg Virginia Luxury Real Estate, Leesburg Virginia homes for sale, Ashburn Virginia homes for sale, Ashburn Virginia Luxury Real Estate, Miguel Avila can help you sell and buy.
Contact Summit County Colorado real estate agent Ted Amenta for all Breckenridge Real Estate listings. Breckenridge is located in Summit County Colorado which includes Breckenridge, Keystone, Frisco, Dillon, Silverthorne, Copper Mountain, Blue River, and Wildernest.