With Atlanta home prices up 8.5 percent between 2013 and 2014 according to the Atlanta Journal-Constitution, now might seem like the best time to buy your first house, before prices in the area go up even more. But before you can even start to look at houses, you need to find out if you qualify for a mortgage. Getting your first mortgage is a big deal, and a lot of people aren’t as prepared for it as they could be. Before you even start looking at places or calling up real estate agents, you’ll want to figure out the ins and outs of getting a home loan.
Figure out what you can afford
When you’re getting your first mortgage, it helps to remember that the monthly mortgage payment is only one part of the amount you may need to pay every month. Before deciding that you can afford to buy a house that costs X amount of dollars, remember the cost of utilities, property taxes and general upkeep on the home. If you are putting less than 10 percent down on the home, you’ll also need to include the cost of private mortgage insurance in your monthly expenses.
Federal mortgage rules that went into effect in 2014 created something called a qualified mortgage. According to the Consumer Financial Protection Bureau, to get a mortgage under the new rules, the total amount of debt you have, including mortgage payments, can’t be more than 43 percent of your gross income. You can use this figure as guide when deciding how much you can afford to borrow.
Your credit counts
A less-than-perfect credit history can impact your ability to get a mortgage. It’s often a good idea to take a peek at your credit several months or even a year before you start seriously considering applying for a mortgage or buying a home. Examining your credit well in advance gives you plenty of time to bring your score up or to contact the credit reporting agencies and have them fix any mistakes on your report.
Shop around for lenders
Not all mortgage lenders are the same, so it can be helpful to shop around. You can find a variety of interest rates from different lenders as well as a variety of levels of service. Lender A might offer a very low interest rate to you but might not be as involved or as willing to answer your questions as lender B.
Bring along your paperwork
Getting your first mortgage is all about showing the lender that you make a certain amount of money, have a certain credit score and have a decent amount of money in the bank. Collect and organize all your documents before you go to the lender, including your pay stubs, bank statements and tax returns. You want to show the lender that you’re financially ready to buy a home and have the documentation available to prove it.
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