Are you thinking about making the leap and buying your first home? That’s so exciting! Not sure where to start? No worries! Amanda, Mortgage Loan Specialist here at Vibe Credit Union, has the guide to buying your first home from start to finish.
How much of a mortgage payment you can truly afford will likely depend on your lifestyle as well as assets, income, and debt. Before you search for your dream home, you should put some time into determining what you can afford. Here are some things to keep in mind:
Down Payment
Saving for a down payment is important. Down payment requirements vary for many loan programs, so talk with your Vibe Mortgage Specialist about the options available to you. You can never start too soon saving for your down payment!
Credit Score
You should also check your credit score. A low credit score means you will likely have to pay a higher interest rate on your mortgage. A credit score of 700 is a great goal, but loans can be approved with lower scores.
Get Pre-Approved
Assuming your credit is in good shape, you should have a preliminary conversation about a mortgage and get “pre-qualified.” This is an educated assumption of what type of mortgage you may qualify for based on your income, debt, and assets.
Total Debt
The total of all your debt payments (cars, credit cards, other loans, etc.), plus the mortgage, should be no more than around 45% of your gross income, sometimes slightly higher. Be sure to consider other expenses like taxes, food, entertainment, and dining out with friends and family. You may want to keep your total below 40% to ensure you can enjoy those other activities.
Housing Expense
Generally, you will also want to keep your Housing Expense (Mortgage Payment, Property Taxes, Homeowners Insurance) below 30% of your gross income. This will insure you have money left in your budget to manage your other expenses.
Job Stability
Lastly, you will need income/job stability to demonstrate the ability to pay back the loan over a period of time. Typically, at least two years of stability is needed.
Are You Ready?
If you’ve got all of these and think you’re ready to apply, give us a call to speak with a Mortgage Specialist or apply for a Pre-Approval directly on our website.
Once pre-approved, you’ll be provided with a “Pre-Approval Letter” to give to your realtor so you can start looking for your dream home in your price range.
We will take it from there and contact you with any questions needed to complete your loan.
The home-buying process can be tricky to navigate, and Vibe is here to help you on your journey home. Visit our website to get started.
