This is so exciting – You’re ready to buy your first home! Chances are, however, that you’re not going to plop down a big wad of cash with which to pay it all off. Most home buyers will end up looking for a home mortgage. But there can be more to buying a home than just considering the flat out sticker price. Will you need to modify, paint, renovate or improve it in any way just to make it livable? Will this home increase in value through the years, or will it be something you will lose money on if and when you sell? These questions could end up making a difference in the procurement of a mortgage and how much the loan should be for.
Are You a First-Time Home Buyer in NJ?
Even if you can put a major down payment on a home, you will need a mortgage to assist with the paying off of the rest of the price of the home. One of the best things you can do before actually starting to look at homes is to seek preapproval for that mortgage. Some individuals aren’t even aware that this possibility exists. Here’s why you should look into it:
- With financial backing that is solid and already approved, sellers will find you far more appealing.
- You can streamline the process of property searches knowing ahead of time what you can afford or the amount that you are preapproved for.
- Knowing in advance what your mortgage payments will be and how much money you’re going to get from a lender will help you more accurately plan for your future as a homeowner.
The New Jersey area has all sorts of homes in various shapes, sizes, conditions, locations. Some with luxurious settings and amenities, others with bare essentials, and houses that fall somewhere in between. First-time buyers may find it difficult to get preapproved. You’ll need to be on top of your game. So what can you do to make the process run more smoothly? Read on to find out.
Have You Saved Up for a Down Payment?
If not, better get a move on! Offering the largest down payment possible to a seller is an excellent way to start the whole process off. You can achieve a better mortgage interest rate, avoid buying private insurance on your mortgage and have less to pay off in the long run if you can offer a 20% or more down payment.
Time to Set up a Budget
You are going to need to establish a budget once you have figured out what your monthly expenses and monthly income are. Every month, you’re going to need to come up with mortgage payments – how much can you realistically afford? Whether you’re going to be facing bad times or good times, the mortgage payment will not wait and is going to last for a good number of years. As a rule of thumb, some advisers suggest that the absolute maximum your mortgage should be is around 35% of your income monthly. Hopefully, this leaves you enough money to take care of all your other expenses.
How is Your Monthly Cash Flow?
This is a comparison between your monthly expenses and your monthly income. If a huge part of your monthly income is already going toward a car payment or student loans, that is going to leave you a lot less to devote to a mortgage. Your financial health will be assessed by a lender who is going to execute a detailed examination of your debts as they relate to your income.
Before seeking approval for a mortgage, you must first make sure that your credit is in excellent shape. Then ensure that as many debts as possible are paid off. Additionally, if you have income that fluctuates for some reason or if you are self-employed, a lender may want more involved proof of income such as tax returns from the last couple of years.
Once you are preapproved and are ready to start shopping for that perfect first home, choose NJLux.com and let us assist you in your search. We know just where to find the home of your dreams!