Portland locals looking into home-buying for the first time need to be prepared. A lack of preparation can, at best, lead to you feeling overwhelmed and out of your depth and, at worst, cost you being approved for a mortgage and being able to secure the home of your dreams.
Getting approved for a mortgage is one of the most crucial steps to preparing to buy a home in Portland. After getting your monthly income and debt sorted, and after getting your credit score in order, there are still more steps you need to take to get approved for a mortgage loan.
Determine Your Mortgage Budget
Before even speaking to a mortgage officer, Portland home buyers will want to determine how much house they can afford and are comfortable paying. A rule of thumb in the mortgage world is that your total housing payment, including fees taxes, and insurance, should be no more than 35% of your gross (pre-tax) income.
For example, say that the total you and your co-buyer earn in a year is $80,000. Your combined maximum housing payment would be $2,333 a month. Keep in mind, however, that that is your absolute max. Staying under that number is highly recommended. For example, if you can stick with a total housing payment that is only 25% of your gross income, that will put less of a financial burden on you.
Keep in mind also that your monthly payments may not be a fixed cost. Your monthly housing payment is subject to variables like mortgage interest rate, property taxes, the cost of home insurance and private mortgage insurance (PMI), and any condo or association fees. Portland home buyers should account for possible fluctuations and avoid stretching themselves too thin.
Figure Out How Much You Can Save For A Down Payment
Unless you’re getting an FHA loan or another special program loan, most mortgage lenders will require a 10% down payment. Portland home buyers should consider putting down 20% if they can afford it to avoid private mortgage insurance, also known as PMI. PMI is a costly insurance that protects your mortgage lender should you foreclose prior to building sufficient equity in the property.
Portland home buyers should determine the maximum they want to spend before beginning the mortgage approval process and commit to it. Real estate agents may try to convince you to spend more, or your own desires may tempt you, but remember that by overextending your funds you risk not being able to afford the home at all. Take a smaller payment that you can afford rather than risk foreclosure later.
Stonebridge Mortgage Group Offers Guidance on All Mortgage Matters
For professional mortgage services, look no further than Stonebridge Mortgage Group. You can rely on Stonebridge Mortgage Group to help guide you through the entire home buying process. We help you with the pre-approval process and assist with real estate loans and other mortgage solutions, both residential and commercial. Stonebridge Mortgage Group serves the greater Portland area and is located in Gresham, Oregon. Don’t wait to buy your new home!
Call us today at 503.661.5580