1. How strong is my financial history?
Make sure your credit score is in good standing before you set out to buy a home. The higher your credit score, the more likely you’ll qualify for a lower interest rate, which could save you thousands of dollars over the life of your mortgage.
2. Which mortgage product is right for me?
Most mortgage products fall into two categories of mortgages: A fixed-rate mortgage or an adjustable-rate mortgage (ARM).Disclosure 1 A fixed rate means you’ll keep the same interest rate for the life of the loan, and your monthly payment will stay the same. An ARM begins with a fixed rate for the initial period, but will then change based on market fluctuations. This means after a certain time, your monthly payments could change.
3. How much should I put down?
Down payments are determined by many factors, such as loan product, geographical location, and borrower income. The more you put down up front, the lower your monthly payment could be. (For example, if you put down a certain amount, mortgage insurance isn’t required.) You can ask your lender about programs that have low down-payment requirements if you’re concerned about how much cash you have available. You can also ask about down-payment assistance programs for first-time buyers and borrowers with low-to-moderate income.
4. What’s an affordable home price for me?
If crunching numbers isn’t your strong suit, enlist the help of an online home-affordability calculator. Just enter your annual income, monthly debts, and expected down payment, and get a sense of the price range that can fit comfortably within your budget.
5. What housing expenses should I include in my budget?
In addition to your down payment, mortgage principal, and closing fees, you’ll want to budget for interest, taxes, and insurance. Don’t forget to also account for utilities, HOA fees, repairs, and regular maintenance.