Most people that buy any type of home, usually finance it. With that being said, that is the biggest purchase one will make in life. With something of that magnitude, you should be very cautious and know what you’re doing beforehand. Here are my 5 things you need to know before you make the jump into financing a home.

1. Understand the full cost of owning a home

There are four parts of a mortgage; Principal, Interest, Taxes, Insurance. While the taxes are usually set, the insurance is dependent upon the property (size, area,pool,pets). Principal is the amount being financed and interest is the amount being charged to borrow that.

Another aspect is your monthly bills, home maintenance, and other repair costs. Its is very important to have a mortgage that you are very comfortable with.

2. Know your credit

Your credit history will determine if you ultimately get approved. By knowing where you stand credit wise, it makes the process that much easier of knowing what needs to be cleaned up and addressed beforehand. You should pull a free annual credit report and know where you stand. (

3. Match your mortgage type with goals

If your income isn’t going to grow over time, you will probably be in the home longer term, so you’ll want a loan with a payment that won’t change, like a 30-year fixed.

Or maybe you expect your income to increase sharply within five years and you’re going to upgrade homes within that time, so you’ll want a five-year ARM, which has a much lower rate.

If you don’t have a 20-percent down payment, you can buy with as little as 3 percent down using FHA, VA, Fannie Mae, or Freddie Mac low-down programs, but you’ll have mortgage insurance on top of your monthly P.I.T.I.

4. Get Pre Approved in advance

If you do the previous two steps and don’t get a pre approval, you may be disappointed. This is where a lender looks at your financial criteria, and determines the likelihood of you being able to approved for a mortgage. You will also need a pre approval letter in the event you want to submit an offer.

5. Know what lenders will require

They’ll ask for full name, address, date of birth, social security number, and ages of children. They’ll also review your credit report, employment history, pay stubs, tax returns, bank statements, divorce and any other legal settlements, and full financials for any businesses you own.

A lender will give you a checklist outlining exactly what documents they need. Follow this checklist exactly. If they only ask for your last two pay stubs, don’t send three.

Also, be prepared to write short letters to explain past inquiries on your credit report, past addresses, and name changes.


I hope this will put you 5 steps closer to achieving your goal of home ownership. Please contact me with any questions you may have.




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