Mortgage Tips

Once you’ve decided that you’re ready to buy a home, you’ll need a mortgage broker. This is the person that will help you figure out how much you can really afford to spend on a house. When it comes right down to it, the overall price of the house isn’t your main concern until you know how much you can afford to pay on a monthly basis.

Your mortgage broker will start by getting some information from you. You will need:

• Pay stubs
  
• Bank Statements
  
• W-2’s
  
• Income Tax Returns
  
• Credit Report
  
  

From all of this information, the mortgage broker will assess your qualification ratio (ratio of mortgage payments to total income), by calculating 28% of your gross income, and begin to contact lenders to find the best loan(s) for you.

Before you begin the process of looking for a mortgage broker, however, there are two important steps you should take.

1) Review your Budget

You need to know your monthly budget and what you can and cannot afford in a mortgage. Make sure your finances are organized, orderly, and easily accounted for. Try to pay off any small debts and get those credit cards taken care of. Remember that closing costs must be paid in cash upon closing, and this will amount to 2-5% of your total mortgage. So even if you’re buying with 100% financing, you will still need to have some cash in the bank.

2) Do your Research

Mortgage vocabulary and definitions can be confusing, technical and overwhelming if you are unfamiliar with the lingo. Understanding term lengths, amortization, Adjustable Rate Mortgages (ARMs) and other financial expressions may feel like deciphering some foreign code. Try to find a mortgage broker who is clear, concise and detailed, and someone you can trust. Start by asking friends to recommend someone they’ve used; word of mouth is always the best way to find someone reputable and trustworthy.