If you’re considering buying a home for the first time, you’re probably already aware that this will be one of the single biggest financial commitments of your life. Buying a home is a big monetary step for many people, and involves a detailed process of budgeting and ensuring your finances are properly organized ahead of time.
At City Creek Mortgage, we can help you with every step along the road toward finding a great mortgage and using it to purchase the home of your dreams. This includes assisting you with all your basic budgeting and financial areas, from your future expectations to your recent history that will determine many important details, such as the mortgage rates you qualify for. With that in mind, let’s go over three important budgeting areas to assess well in advance of any mortgage or home purchase.
The most common budgeting format for Americans is a monthly one, and while it’s totally fine if you utilize some other method normally, you should strongly consider making a change within the realm of your mortgage. Mortgage payments are made monthly, and as these will be some of your most significant expenses, it makes sense to align your entire budgeting system this way.
In today’s modern age, making a trackable budget is simple and easy. There are numerous apps, software programs or even simple spreadsheets that allow you to track income and expenses, including detailing all the specific sources and their relevant numbers. The entire budgeting process for your mortgage will feel a lot simpler once you have a basic handle on your monthly figures and what you can or can’t afford on top of them.
Once you’ve set your basic budget and have a baseline for your finances, it’s time to get a copy of your credit report. This is information is collected by three major credit reporting agencies. The data is what lenders look at closely when it comes to assessing your credit worthiness.
Using your financial history, particularly your repayment of debt in a timely manner, a credit score will give a single number that reflects your overall likelihood of repaying back a loan. You can obtain your credit score for free at least once a year without dinging the score at all, so take advantage of this.
Down Payment Considerations
Finally, consider the funds you might have available to put down on a down payment. This isn’t necessarily required for every purchase, but having one can not only speed up the process but also lower your total amount of interest paid over the life of the loan. Your down payment total may also play a big role in whether or not you’re required to carry private mortgage insurance.
For more on arranging your finances ahead of a mortgage, or to learn about any of our mortgage loan services, speak to the pros at City Creek Mortgage today.