A Mortgage Roadmap- Finding Your Way Home
Are you ready to embark on a home buying journey but you’re not sure where to start? Chances are, you’ve already started looking at some homes and you probably have a general idea of how much you can afford or want to spend. Most people have spent some time online doing research before they ever speak to a realtor or a lender.
The first thing you want to do when you finally make a commitment to move forward is nail down your budget. You don’t want to waste time looking at homes you can’t afford, and you don’t want to apply for a mortgage you can’t handle.
There are different methods to determine how much you should borrow, such as the 28/36 rule, which says that you should spend no more than 28% of your monthly income on housing costs and no more than 36% on total debt, including your mortgage. There are also some helpful online calculators and tools.
Citizens Savings Bank can provide you with a prequalification to determine how much you can afford, taking into consideration your income and expenses, debt-to-income ratio, credit score, etc. Your debt-to-income ratio is something that all lenders will take into consideration when you apply for a mortgage. Improving your debt-to-income ratio before you apply for a mortgage is just one thing you can do to improve your chances of getting approved, and possibly getting a lower interest rate.
Once you know how much you can afford, you should find a reputable lender. Don’t just go online to compare rates and jump on the best offer you can find. The mortgage process can be complicated and stressful, and your lender is your lender for the life of your mortgage. A seasoned lending professional will help guide you through the mortgage process from start to finish, and will help you make sure everything is right for your unique situation. Your mortgage needs don’t end the day you close on your loan. You want a true partner that will be on your side for the next 15, 20, or 30 years!
Next you want to select a realtor if you don’t already have one and begin looking at listings. Your realtor can help you find listings that match your criteria and schedule showings for you. If you’ve never worked with a realtor before, you can do some research online first. There are many articles about what to look for in a realtor. Once you decide on a home you want to buy, your realtor will help you make an offer. They have the knowledge to help determine a fair offer based on different factors. Your offer may include contingencies, such as a mortgage contingency or inspection contingencies. Your realtor can help you determine if any of these are necessary before making the offer. Once you make the offer, you will also provide a deposit or escrow to show the buyer you’re serious about the purchase.
Next, it’s time to make an offer on a home! If you want to improve the chances of your offer being accepted, you can get a preapproval from your lender to provide to the seller. This is something provided by your financial institution that states you are pre-approved for a certain dollar amount. This greatly increases your chances when placing a bid on a home, and many realtors will not place a bid without it. This is different from pre-qualification, which is more of an estimate and not a guarantee that you’ll be approved.
If your offer is accepted you will move on to the home inspection phase, where you ensure that everything is in good condition. Your financial institution will want to do an appraisal of the home at this point, to make sure it’s worth what they are lending to you. You can add an inspection contingency to your offer so that if the home fails any inspections you don’t have to follow through. Your financial institution will make a determination of the home’s value based on their appraisal. If all inspections and the appraisal are satisfactory, your next step is closing on your mortgage!
Before your official closing, you’ll want to walk through the property again with your realtor just to be sure everything looks as expected. You should also sit down with your lender and review all closing paperwork thoroughly, to make sure you understand all of the information. At the closing, all parties will sign all of the required paperwork and ensure that everything is in order, and closing costs are paid. Once the final closing costs are paid you will receive the title to the home and your place in the world as a proud homeowner.
Buying a home can be quite a journey, and if you don’t have the right team on your side, you can hit some major bumps in the road. At Citizens Savings Bank, we have dedicated over 120 years to helping people find their way home.
Citizens Savings Bank has multiple locations throughout Lackawanna, Wayne, and Monroe Counties. For branch locations and hours, visit our website. We also have a Customer Support Team ready to answer any questions you may have. Call us today at 1-800-692-6279 or email [email protected]. Member FDIC. Equal Housing Lender.