Before you start the home buying process, there are a few useful tips you should know to help you save up for that big purchase. Here at Equity Mortgage, our team understands how much of a financial commitment it is to purchase a home, therefore, we have provided a list of 3 budgeting tips to help you save for your first house and Lutherville mortgage.
Tip #1: Know What You Can Afford
Before you obtain a Lutherville mortgage, it is important to go through your finances and map out your monthly expenses. This organization can give you a better understanding of what type of home loan you can apply for. Creating a budget and knowing how much you can spend towards your monthly mortgage payments can be helpful once you start shopping for a home. Knowing your affordability will help you avoid stretching your finances to the highest possible limit or obtaining large amounts of debt since you will know what price range to shop in.
To get a more concrete idea on how much you are able to borrow for your mortgage, you can get pre-approved from your local lender. To find out more information on how to get pre-approved, please call 443-471-4310.
Tip #2: Save For A Down Payment
A down payment is a certain percentage you have to pay towards your home’s purchase price. This money is due before your Lutherville home loan is completed and cannot be borrowed from the bank. Here in the United States, if you do not pay at least 20% of your home’s down payment, you will be required to obtain private mortgage insurance (PMI). This is an extra fee you will have to pay for since you will be considered a high-risk borrower. PMI gives lenders the security of knowing they are insured if you default on your mortgage payments.
Start saving now to avoid having to pay for additional insurance.
Tip #3: Understand Your Closing Costs
As a first time homebuyer, you may be unaware of some of the additional costs associated with a home beside the listing price. This includes but is not limited to, your loan origination fee, lawyer fees, title insurance, appraisal, loan processing fee, escrow fee, and homeowners insurance. Being familiar with these costs will help you know ahead of time how much you should be saving before you purchase your first home.
For more useful budgeting tips, or to get started on your mortgage application today, please contact your local Lutherville mortgage lender at 443-471-4310.