Buying a home is a huge undertaking. In fact, it might be one of the biggest things that you do in your life. I know that years ago when I bought my first home, I was amazed at everything that I had to do to get a loan and finally get into the house. It can all be a little overwhelming.
The fact is that the financial journey to owning a new home can take anywhere from months to years depending on where you are in life, your finances and many other factors. For me, my first home was a starter home because I knew that I would eventually buy another home in LA when I got married. But even my starter home took me 4 months to buy from start to finish.
One of the first things that you should do when considering buying a new home is to figure out how much home you can afford. My father is a realtor so I was very happy to have his help. He told me to look for homes that were no more than 2.5 times my salary. Since I wanted to not spend that much, I stuck with just 2 times my salary plus a 20% down payment so I wouldn't need mortgage insurance.
It was pretty easy to stick to my price range and look for homes that I could afford. This was key for me so I knew exactly what I was going to spend. I used a mortgage calculator to figure out my exact payments. Capital One shares, “Ideally, your monthly housing payment shouldn’t be more than 28 percent of your gross household monthly income.” I also had to factor in closing costs but because I purchased a new home, the builder took care of closing costs. Closing costs should always be considered because they can be very high in some cases.
My financial history was very important to getting a mortgage. Lenders look at things like:
I had spent years building up good credit and making smart purchases. I paid my bills on time and so when I went to apply for a mortgage, I was a good candidate.
Mortgages come in all shapes and sizes, and which one you choose depends on a lot of variables, including your budget, the amount you can afford to put down, the interest you’ll pay and the term length. All mortgages have pros and cons, but starting with at least a top-line understanding of what’s available is important as you save for this major purchase.
Since buying a home is an important process, but certainly not a simple one – Capital One’s new online resource lays the groundwork with a glossary of terms you should know, an overview of the loans available and more.
The Capital One Home Loans Online Neighborhood is a free online resource where you can learn all about home buying. They’ve gathered easy-to-understand articles and helpful videos, as well as information about Capital One’s Home Loans offerings. Capital One’s goal is help first-time homebuyers understand how the home loan process works, which is why they’ve launched this new online learning center that features the know-how you’ll need to become the savviest homeowners on the block.
Their friendly online neighborhood covers all stages of the home buying process – from deciding whether now is even the right time to buy and how much home you can afford, to the documents you need to apply for a mortgage. Check out the Capital One Home Loans Online Neighborhood which is a great tool for potential home buyers.
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I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own.
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