If you are ready to look for your next home, you need to deal with financing the home first, which requires speaking to a mortgage lender. Here is a quick step-by-step guide to help you determine the financing for your next home.
Step 1: Talk to a Preferred Mortgage Lender
Yes, you should do this before searching for homes. Speaking with a lender will give you all the information you need about financing a home and your lender will determine how much you can afford, which can save you time searching for homes outside of your price range.
Step 2: Check Your Credit
You can check your credit or your mortgage lender can check it, although you will be better prepared to assess your finances with your lender if you have your credit score knowledge. Don’t overdo checking your credit score, as checking your score frequently will lower your score. The higher the score, the better the loan terms will be.
Step 3: Assess Your Savings
Loan terms depend heavily on how much money you can put down on the home. The best rates are available to those who put down 20 percent on the home. Putting 20 percent down can allow you to skip private mortgage insurance, which could potentially add $100 to your monthly payment. Keep in mind that you will still need money for closing costs and other expenses for moving costs and inspection fees.
Step 4: Evaluate Your Budget
How much can you honestly afford each month on housing expenses? The traditional rule of thumb is to spend no more than 1/3 of your total income on housing expenses. Consider future expenses also like children, new cars, etc.
Step 5: Collect Personal Documents
Lenders will require an abundance of documents for you to process your home loan. Prepare to supply your recent pay stubs, tax returns, W2 statements, two months of bank and investment account statements and any other financial statements you have.
Step 6: Shop Around
Spend time shopping around for your home loan. Interest rates, closing costs and promotions vary with each lender so be sure to do your research to make sure you are getting the best loan. Pay attention to bank fees as well. The key is to find a lender you are comfortable working with on your home loan.
Finding a Portland Lender
Check out the list of preferred Portland Lenders we have provided and you will find a lender who wants to work with you on your budget and provide you with all the information you need to make a financially sound decision on your home loan.