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First Time Buyers

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First Time Homebuyers: What can you afford?

Don’t stretch your budget with undue consideration for what might happen in the future. For first time homebuyers, the total price may forget important details like property taxes, heating bills, insurance, and of course maintenance. The cost of these things can be variable, and should not be underestimated by first-timers.

It’s also worth remembering that a mortgage can stretch out 30 years into the future, a period of time which is so large that it makes planning difficult. First time buyers should think about what their futures may look like, potential long term plans, and of course the predicted future of the area in which they’re planning to purchase a home.

What this means when it comes to lenders is that you should have substantial proof of income to indicate that you can in fact afford the mortgage for which you are applying. They’ll also be interested in your other expenses, such as children, travel, and general spending habits.

Mortgage Size, how big is too big?

As a rule of thumb, the price of your mortgage, its interest, and taxes should exceed no more than 28% of your monthly income. The best way to learn about exactly how large of a mortgage you can afford would be to contact a bank directly. They will sit down with you, go over your monthly income, expenses, and liabilities and determine what they believe you can afford based on the current maximum lending amount set by the government.

Where to Apply

The best place to get a mortgage or home equity loan is your local bank. To find the bank that suits you best, use our directory which features all of the best lenders throughout Texas. Search for your location and specify that you are seeking a mortgage or home equity loan, and the best lenders will be provided to you, complete with their contact details, rating, and assessment.

How to Apply for a Mortgage

When applying for your mortgage you will be asked a lot of questions, whether you believe yourself to be capable to repay the loan, and how long you expect the term to last. Based on these answers, your lender, or our lender search will be able to recommend a mortgage which will fit your needs. Taking direct advice from a financial expert will always be your best best, unless you have first hand experience yourself. For first time borrowers, expert advice will almost always prove to be the most beneficial.

If you believe yourself to be knowledgeable in the mortgage process, you can obtain an execution only mortgage, meaning that the loan is simply provided by the bank and no financial advice is given. If you choose to go down this road, you ought to know exactly which home you want to buy, your desired interest rate and rate type, the quantity of money you need, and for how long you want the term to be.

Down Payment Size

When obtaining a mortgage, a down payment will be required. Depending on the lender, the minimum percentage may vary, however a standard amount is roughly 10% of the amount borrowed. On a $200,000 mortgage, this means you will require $20,000 cash as a down payment.

Larger deposits typically carry lower interest rates, and increase your negotiating power. If possible, make a large down payment, and remember that you will likely end up paying back your mortgage principle twice over due to interest.

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