DETERMINING IF YOU’RE READY TO OWN YOUR OWN HOME
Check your credit history and score.
Your credit can affect your ability to qualify for a mortgage or specific mortgage rate. Before you shop for a house or a mortgage, find out what your credit score is—visit www.annualcreditreport.com or call 877.322.8228.
How much money do you need for a down payment?
Depending on the qualifying loan product, your down payment can be as low as three percent of the home purchase price. With a down payment of 20 percent or more, you can avoid having to pay private mortgage insurance (PMI), reducing your monthly mortgage payment.
Review your current lifestyle and future plans.
You should consider your current living standards, as well as any future major expenses you may have, such as a wedding or college tuition. And remember, you want to buy what you can comfortably afford today, not five years from now. Use these Key Ratios:
Housing Expense Ratio. Your mortgage payment (principal, interest, taxes and mortgage insurance) should be no more than 33 percent of your monthly gross income.
Debt-to-Income Ratio. Your housing expense ratio combined with all other debts (credit cards, student loans, alimony, child support, car loans and housing expenses) should be no more than 43 percent of your monthly gross income.
Free to Suffolk Credit Union members.
By partnering with GreenPath Financial Wellness, Suffolk Federal membership provides the benefit of financial counseling services to help with evaluating your credit report, debt management and pre-purchase education. Learn more at www.suffolkfcu.org/financial-counseling
HOW MUCH CAN YOU AFFORD?
Your annual gross income.
You can get a very rough estimate of your affordable home price range by multiplying your annual gross income by 2.5. For example, if your annual gross income is $50,000, you may be able to afford a home worth $125,000 (this varies depending on current interest rates, your debt and credit history).
Current mortgage rates.
Mortgage rates change constantly based on the economic factors that affect the demand for mortgages among investors like Freddie Mac. Take a look at current Mortgage Rates.
Property taxes and homeowners Insurance cost.
Find out what your total monthly housing cost would be. In some areas, what you'll pay for your taxes and insurance escrow can almost double your mortgage payment. To get an idea of what you'll pay in insurance, pick a property in the area you are interested in and contact a local insurance agent for an estimate. To learn about potential taxes, check your local property appraiser’s website. Remember, exemptions and intricacies of local tax law can create differences between what a homeowner is currently paying and what you can expect to pay as a new homeowner.
Fees and Closing Costs
Remember to factor in the expenses and fees you will incur for a home appraisal, a home inspection and other professional services required to buy a home. Speak with your Suffolk Federal Mortgage Loan Officer for personalized estimates of fees and closing costs.
Get Pre-Approved.
Realtors prefer you to provide them with a preapproval letter. It lets them know you did your homework and you mean business. You can apply and receive your preapproval letter from the convenience of your own home by applying today.
Speak with a Reputable Realtor.
You can find a reputable real estate agent in your area. They will be able to tell you the climate of the area you are interested in. Realtors can also provide you with facts and trends about your neighborhood of interest.
Apply now for a better mortgage experience with Suffolk Credit Union!