The 7 Best Mortgage Lenders That Make You Feel At Home

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Finding the right mortgage loan is an essential step in purchasing a home. There are many different mortgage lenders out there. You need to find the best one for your needs. Many mortgage lenders provide mortgage loans that won’t work for you. Doing your research is important. You should start your search for a mortgage loan by analyzing the lenders out there. You need to know what to look for in a good lender.

Here we have a compiled list of the best mortgage lenders. In compiling this list, we wish to provide useful information to any consumer out there. The list below provides lenders who provide mortgage loans to a wide variety of consumer types. Regardless of your financial situation, you can find a mortgage lender offering a suitable product. As long as you have a high enough credit score to qualify for a mortgage, you should be able to find a mortgage lender on the list below who you can do business with.

In addition to knowing who the best mortgage lenders are, you also want to explore details on how to evaluate mortgage lenders. You also need to go through a few steps to find the right lender for your needs. Below is the key information you need to find the right mortgage lender to work with. Make your dream of homeownership a reality by finding a mortgage product today.

Things to Look For in a Good Mortgage Lender

For buying a house mortgage, there are a few key considerations. You need to know how to evaluate various mortgage lenders. Your mortgage lender is important to your financial health.

You need to consider the costs of the mortgage. You have to pay your entire mortgage plus interest back over time. You also have to pay various fees for some mortgages. It’s important to shop around. As with any large purchase, you want to find the most affordable option available.

Cost isn’t the only consideration. You also need to find a mortgage lender that will be there for you when you have questions. It’s good to work with a mortgage lender that will be flexible about repayment. Things might come up that cause you to be late on a payment. You want to look for a mortgage lender that won’t penalize you too severely if you need to skip a payment.

Before we represent you the best mortgage lenders, you can enter your information below and see if you qualify for any loan offered:


The 7 Best Mortgage Lenders to Consider

When you start looking for a mortgage, you might feel overwhelmed. There are many lenders out there, and there are many types of mortgages. It can be complicated to evaluate the hundreds and thousands of lenders out there. Yet it’s important that you don’t select a lender randomly. You need to be informed regarding your choice of lender.

We want to help you to become familiar with the best mortgage lenders. The mortgage you choose will impact you financially. You don’t want to pay more than necessary for your mortgage loan. Finding a fair and affordable deal is your priority.

Go through the information below on seven great mortgage lenders. Look at the products and approval requirements of these lenders. Then, you can find the best lender to meet your borrowing needs.

Citi Mortgage

If you’re looking for a good mortgage lender, consider Citi Mortgage. This mortgage provider is worth considering. Citibank is a huge, mainstream financial institution. The company, therefore, has a good reputation. You can rest assured that you’ll get a fair deal with Citi Mortgage.

One good thing to know is that Citi Mortgage has a wide variety of mortgage products available. You can get either adjustable-rate or fixed-rate mortgages from Citi Mortgage. You can also choose from a variety of loan terms including 10, 15, 20, or 30-year mortgages.

One of the biggest advantages of taking out a mortgage with Citi is the options to enjoy a low down payment. You can put as little as three percent of the home value down to take out a mortgage with Citi. If your credit score is high but your savings are low, Citi Mortgage might be the answer. However, a relatively low down payment isn’t the only advantage. You can also benefit from the fact that Citi Mortgage offers mortgages on properties in every state in the country. If you’re already banking with Citibank, you could take advantage of a discounted mortgage. It’s also worth noting that Citi will consider data outside your credit report. If your credit score is low but you have a strong history for making regular payments on rent, for example, you could still qualify.

You’ll also want to be aware of a few disadvantages of a mortgage loan with Citi Mortgage. You can’t apply online to work with this mortgage provider. Though Citi is among the best mortgage lenders, you will have to pay an application fee to apply with Citi as part of the mortgage process. Another thing to consider is that there are origination fees on these mortgage loans.

Chase

Chase bank is another financial institution to mention when discussing the best mortgage lenders. Like Citi, Chase is another large financial institution. This means that Chase has a recognized reputation for providing standard financial products like mortgages. Also, like Citi, Chase offers mortgage loans with as little as 3 percent as a down payment.

You can qualify for a mortgage from Chase with a credit score of 620. One advantage that Chase offers over Citi is tat you can apply over the Internet. As with Citi Mortgage, Chase also offers discounts on mortgage products for pre-existing clients.

There are a lot of different loan products available from Chase. You can take out a traditional mortgage. You can also get home equity, refinances, or jumbo mortgage loan from Chase. The case offers fixed and variable rate mortgages. Chase also works with the USDA to provide USDA home loans.

One of the disadvantages of a mortgage loan from Chase is that you will have to pay both, an origination and an underwriting fee. You will also need to speak with a mortgage banker as part of the process of applying.

Quicken Loans

Those who take out a mortgage loan from Quicken Loans are often surprised with the convenience of the process. You can take out a loan from Quicken Loans if you have a credit score of at least 620. You can also benefit from the convenience of applying online. One thing that’s particularly easy with Quicken Loans is verifying employment. This can be done instantly for many American workers. You might be particularly interested in borrowing from Quicken Loans if you are taking out a fixed-rate mortgage. Quicken Loans offers custom fixed-rate mortgage loan products. These can vary in term length between eight years and 30 years.

If you’re interested in an FHA loan, you might want to work with Quicken Loans. Quicken Loans also offers USDA loans. There are also some Freddie Mac and Fannie Mae products carried by Quicken Loans. Quicken Loans is in some ways slightly more limited in terms of the products they carry. They do not carry home equity loans, for example. Quicken Loans relies a great deal on credit score data. If your credit score is low, you might struggle to get approved. Unlike Citi Mortgage, Quicken Loans will not allow alternative credit data to strengthen your application.

Quicken Loans is among the best mortgage lenders for many consumers. This mortgage provider might be ideal depending on your unique needs. It might be worthwhile to research your options with Quicken Loans if your credit score is strong and you’re looking for a fast and convenient online process.

KeyBank

There are quite a few mortgage products to consider from KeyBank. There are also some home equity loans you might want to consider if you already own a property. One thing to know upfront is that KeyBank only offers mortgages in 19 states. If you don’t live in one of these 19 states, you’ll have to look elsewhere.

That being said, there are numerous advantages to working with KeyBank on your mortgage. KeyBank can potentially offer you a mortgage loan for no money down. If your credit and income are strong enough, you could potentially b a property without paying anything upfront. Homebuyers are often surprised at the various discounts they can take advantage of with KeyBank.

You might be able to be approved for a loan with KeyBank despite not having a traditional credit history. KeyBank considers nontraditional credit data in qualifying applicants for mortgage loans. You might find KeyBank to be among the best mortgage lenders if you are interested in a Fannie Mae HomeReady Mortgage. This is one of the federally backed mortgage loan features that KeyBank offers.

One drawback is that you can’t apply online with KeyBank. Another drawback is that KeyBank doesn’t offer any USDA mortgage loans.

Rocket Mortgage

Rocket mortgage loanIf your credit score isn’t very high, Rocket Mortgage might be a good option for you. You can qualify for a mortgage from Rocket Mortgage with a credit score as low as 580. Rocket Mortgage also offers a full range of mortgage products. In addition to both fixed and adjustable-rate mortgages, Rocket Mortgage also offers jumbo, FHA, USDA, and VA mortgages.

If you’re looking for the best mortgage lenders with extensive online capabilities, Rocket Mortage is a good option. In fact, Rocket Mortgage offers one of the most convenient mortgages processes out there. They also give you a lot of opportunities to customize your loan to your needs.

On the other hand, Rocket Mortgage might not be a good option if you want one-on-one assistance. Another possible drawback is that your interest rate might be high with Rocket Mortgage. Also, Rocket Mortgage might not approve you if you’re carrying a particularly high debt load.

Guild Mortgage Company

It might be a good idea to apply for a mortgage with Guild Mortgage Company. This mortgage provider offers mortgage in 48 states. This means that this company most likely provides mortgages in your area. However, this company does not provide mortgages in New Jersey or New York. Another thing that puts Guild Mortgage Company among the best mortgage lenders is its long history. Guild Mortgage Company has been in business since 1960.

Those who are buying a home for the first time might be especially interested in working with Guild Mortgage Company. The company has a reputation for being especially helpful with first-time home buyers. Another advantage of working with Guild Mortgage Company is that they offer so many different mortgage products. You can take out a conventional mortgage loan with Guild Mortgage Company. You can borrow an adjustable-rate or fixed-rate mortgage. You can also apply for FHA, USDA, or VA loans. If you are struggling to save up a down payment, you can take advantage of down payment assistance with Guild Mortgage Company.

There are a few fees to be aware of if you take out a loan from Guild Mortgage Company. You will have to pa an insufficient funds fee of $15 with these mortgage loans. You could also be charged a late payment fee that depends on the amounts that are past due on your mortgage account.

AmeriSave

AmeriSave is a good mortgage lender to work with if you’re wanting to apply for government loans. This lender takes consumers with credit scores as low as 600. They are among the best mortgage lenders because they don’t charge you to apply. They also don’t charge you an origination fee. One huge perk you can enjoy with AmeriSave is that you can get rewards as high as $4,500 if you buy a property using the assistance of one of the companies affiliated real estate agents.

The major drawback to being aware of when it comes to working with AmeriSave is that interest rates can be a little on the high side. That being said, you don’t have to have a large down payment with AmeriSave. In fact, you can qualify with a down payment of only three percent of the home value.

There are many different mortgage products available from this lender. You can work with AmeriSave to purchase a home. You can also work with AmeriSave to refinance your existing mortgage. You can take out government-backed mortgages like FHA, USDA, and VA mortgages with this mortgage provider. The average amount for an AmeriSave mortgage is slightly more than $250,000. If you are looking to buy a home with a price of around $250,000, AmeriSave might be a good mortgage provider to work with.

Steps to Evaluating These Mortgage Lenders

To find the best mortgage lenders, you need to go through a few steps. Start by analyzing your situation. Then consider exactly what you’re looking for. You probably are looking to by a property in a particular area. Maybe you are dreaming about the country life. In that case, you should think about rural mortgages. You’re also looking for a property of a certain size with certain amenities. Determine what you want to start out. Then determine how much your envisioned home will cost you.

Figure out what your credit standing is. If your credit score is lower than 580, you probably have little to no chance of getting a mortgage loan. Once you analyze your income and credit score, figure out which lenders mentioned above are most likely to work with you.

You should now understand how to shop for a mortgage. You should also have some key information on who the best mortgage lenders are. The sooner you get started preparing to apply for a mortgage, the sooner you’ll be a homeowner. You might be surprised at how easy it is to qualify for a mortgage. Resourcefulness and effort are key. You need to put time into acquiring the information you need to become a homeowner.

Some mortgage lenders offer fair and accessible products. Others offer mortgages you may not qualify for. Still, others provide mortgage products but don’t offer good customer service. Some mortgage lenders charge interest rates that are excessively high. You need to understand which mortgage lenders are the best on the market.

In Conclusion

Home ownership is a dream that’s within reach for so many consumers. Unfortunately, a lot of consumers don’t know which lenders to work with. Research the seven mortgage lenders mentioned here. Then, you can apply for the best prospect for your financing needs. Strengthen your finances with the right mortgage. Owning a home puts you in complete control of your living situation. We hope to help you on your journey to home ownership with this important information.

Important Mortgage Documents You’ll Need to Sign

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Buying a new house is an incredibly exciting time in your life. It can also be an incredibly stressful one. I am a firm believer in reducing stress by eliminating all the possible unknowns. I believe that buying a house is stressful (aside from a large amount of money you are spending) because few people really know what to expect. It just seems like one more document to fill out, another set of statements to fax, and one more phone call to make. If you have an awareness of what is needed and a schedule when the paperwork and phone calls are needed, then you can be better prepared and relax a little bit. You can start by reading this article about residential mortgage documents so you can have some expectation of what is coming your way.

What Is A Mortgage?

Before I jump right into an explanation of mortgage documents, I want to first explain a mortgage. When you think about buying a house mortgage, I am sure you know that typically comes with a large loan and a relatively high monthly payment. This is will most likely be the biggest payment you make each month. There are not many people that can afford to pay for a house with the money they have saved, so they usually need to take out a loan, or mortgage, that allows them to buy a house and make payments to the lender until the loan is paid back. As with all loans, the lender adds interest to the money you borrow as a fee for allowing you to borrow the money in the first place. That is how the bank makes money, by charging you interest and fees.

When you borrow money for a mortgage, you are using the house that you are buying as collateral. That means you are stating that you promise you will repay the money and if you do not, the lender can take your house as payment. Mortgages can either be a fixed rate or an adjustable-rate mortgage. A fixed-rate mortgage means that the interest rate is fixed and remains the same for the life of your mortgage. An adjustable-rate mortgage means that the rate will change over the life of the mortgage. There are different adjustable-rate mortgages, so the rate changes based on the criteria around your mortgage.

 

Mortgage Application Documents

There is a lot to know about mortgages before you consider buying a house. To determine whether you’ll qualify for a mortgage loan, you need to know what mortgage lenders look at. Even though we live in a paperless world, one of the areas that have not gone paperless is mortgages. Not only is there a lot of paperwork for you to fill out, but there are a lot of mortgage documents and statements that you need to provide to the lender. What is good to know is that the documents are relatively easy to fill out, there are just a lot of them. When you get any document that you need to fill out, make sure you read the entire document and fill out the form completely. Do not skip over any areas and make sure the information is as correct as possible.

Listed below are many of the documents you must fill out or provide when applying for a mortgage.

Mortgage Application

One of the most important mortgage documents you will fill out is the actual loan application. It is called a Uniform Residential Loan Application. It requires information from every person whose name is going on the loan. That may be you, you and your spouse, or you and your partner. No matter who is it, you all must fill out the loan application. This document requires information about you, the house you want to purchase, previous employer information, financial information, and some other questions. It is important that you fill out the information completely and correctly. One of the next steps is the lender asking you for proof of all of the information on this document. You can think of this document as the first page of all your mortgage paperwork. The closing documents are the last pages and all the supporting information goes in the middle.


Income Verification

You will come to realize that all of the mortgage documents are important. When the lender asks you to fill out a document, or submit proof of something, they give you a due date. It is important that you meet those requirements because failure to do so can result in being denied a mortgage. On your loan application, you list your income and then the lender wants to see proof of it. They want to know that you earn enough money to pay the mortgage payment. They want to know how long you have been with your current employer as well as how much you earn. When you have a long term employment history with the same employer, lenders see that to mean that you are reliable.

The documents a lender may request are:

W2s

A lender is most likely going to request W2s for the past two years for each person applying for the mortgage. If you do not have access to these records, you may have to contact the IRS to get copies. If you have breaks in your employment, you may need to write a written explanation as to why

Pay stubs

These are the best way for a lender to see what amount of money is coming home with each payment. Most likely, you will need to provide 30 days of pay stubs. For most people that is two pay stubs, but for those who are paid weekly, they will need to provide four. If you receive any other payments that you are reporting on your application, you must provide proof of that, too

Tax returns

Lenders want to see how much you claimed and deducted on your tax returns. In addition to providing tax returns, you may also fill out a form that allows the lender to request the transcript directly from IRS

Additional income

If you are self-employed, then you may have to provide some additional documentation, such as a profit and loss statement, 1099s, and three years of tax returns. If you receive any type of alimony or child support, you may need to provide the court order along with bank statements or checks to prove this

Assets and Debts

Some additional mortgage documents that you should be aware you will need to provide are ones that show your assets and debts. Lenders are especially interested in your debt and your debt to income ratio. They want to know how much debt you have in relation to the amount of income you have coming in each month. It may be helpful to you, especially if you have a high amount of debt, if you create an account to save money to pay for your house so that you can show you have money prepared for that. This fund can also help you when it comes to early costs with purchasing a home, such as furniture, or any repairs or upgrades that you may have to make. Lenders are interested that you are making sound financial decisions in general.

Their goal is to make sure that you will be able to continue to pay your mortgage for the entire length of your mortgage. On the mortgage application, you list out all of your debts and the lender may want to see proof of those debts as well as your bank statements to show your assets.

The documents a lender may request are:

Bank statements

Lenders may request two to three statements of all your bank accounts. They use these documents to verify your income, balances in your accounts, and where you are getting the money for your down payment. If you have large deposits in your account, the lender is going to want an explanation of the source. Some, but not all lenders, allow you to use a gift for a down payment. If your lender allows a gift, you may have to get the gifter to sign a document stating that it was a gift and repayment is not expected

Retirement accounts

Lenders want to see two to three months of statements from any investment accounts that you list on the mortgage application. This can include 401k, IRAs, CDs, and stocks.

Closing Documents

The mortgage documents that I mentioned above are the documents that are requested when you are applying for a mortgage and typically before you are actually approved for the loan. If you apply for one loan and it is not approved, you may decide to apply for a different one. If that is the case, you should expect to have to provide the same documentation again. There may be some additional documents that you have to provide, depending on your situation.

If you have been renting a home for at least a year, you may need to provide proof of that rent. If you have recently divorced, you may need to provide the divorce decree and child support. This information may also be important if the divorce has impacted your credit. If you have had a bankruptcy and foreclosure, then you may have to provide some additional documentation. You may need to provide proof that the debts have been paid. You also may need to wait at least seven years to purchase a home.

Closing Disclosure

Once you have finally made it to closing, you may not be out of the woods, yet, as far as mortgage documents are concerned. You still have some additional forms to sign. You may not have to fill them out, but you have to review them and sign them. And you should have the opportunity to review the documents three days prior to your scheduled closing date. When you review these documents, you want to verify that your name is spelled correctly. In addition, verify that the loan amount, interest rate, loan type, and purpose line up with what you are expecting. You do not want any surprises when it comes to those documents.

In addition, read all of the fine print to determine if there is a penalty if you pay off your mortgage early. You also want to make sure that there is not a balloon payment for your mortgage that you were not previously aware of before signing the paperwork. You also want to make sure that the estimated monthly payment matches the estimate that you received for your loan. The amount of money that you must bring to closing is also listed on these documents, so you want to make sure that you are aware of that amount and that you have the cash to bring to closing. You do not want to get into the office to sign the paperwork and be surprised.

Promissory Note

This is one of the mortgage documents that is your agreement to repay the money you borrow. It should list the amount you are borrowing, late payment penalties, and your interest rate. If you have an adjustable interest rate, there should be details about how and when your rate can change.

Deed of Trust

In the list of mortgage documents, this is the one that gives you your rights as a borrower. It also states that if you do not pay your mortgage, the lender can foreclose and take your house. This document contains a section that states you will not use hazardous material in your home. It also states that if you sell the home listed on the documents, then you must repay the loan in full.

Escrow and Right of Recission

These mortgage documents tell you some important information. Escrow is an account that holds money for you and then pays your taxes and homeowners insurance. This account takes money from each mortgage payment and it sits there until those bills need to be paid. This document outlines how much money is being put in your escrow account and then outlining how it is being used. You want to make sure you understand the money that is going in and out of this account.

The right of recission document basically states that you have the right to cancel your loan within three business days. This document is only included when you are refinancing your primary residence. If this is not a refinance, you will not sign this document.

Difference Between a Bank and Mortgage Company

When you are looking for a mortgage lender, you have two options available to you, a traditional bank or a mortgage company. A bank is probably the lender type with which you are most familiar. They usually have one person dedicated to mortgages. This person completely understands all of the mortgage products the bank offers. They help you with your financial situation by taking an in depth look at your financial situation and looking for ways you can improve it. They may not be able to offer you a loan if your credit score is too low. Typically, the bank pays its employees a salary so they are not charging you extra fees for their services.

A mortgage company employs a large number of employees that specialize in lending and financial products. They have more options to provide you. If you have a low credit score, a mortgage company may be able to get you approved for loans whereas a traditional bank may not be able to. A mortgage company will assess your credit score and income and look for mortgage options that are the best fit for you. Mortgage companies work off commission and may pass that cost along to you in extra fees. The other side of that is they may work harder for you to get your mortgage approved. No matter which option you choose, the mortgage documents that you need to fill out will remain the same.

Conclusion

I have run through a list of mortgage documents that you are going to have to fill out and sign when you want a mortgage. There are always special circumstances that may require you to fill out some additional documents that are not listed here. These are the major ones that you should expect to sign. If you do not sign them, you may want to ask your lender why you did not get that document. You do not want to get to the final days right before closing and find out you have to obtain some more documents and you only have hours to do so.

How Much Should You Have in the Bank to Buy a Home?

House model and money on weight scale with out of focus home.

Buying a home is going to require that you have some money in the bank. There are many expenses you will need to save up for beyond just the down payment.

How Much Money do You Need For the Expenses When Buying a House

Before you buy a home, it’s important to note how much you can afford. There is not should be any space for mistakes when it comes to your home buying. Your house is going to be your biggest purchase so this is an important first step.

Begin the budget by figuring out how much you and your co-buyer, if you are having one, earn each month. Be sure to include all revenue streams, such as investment profits and alimony.

List housing costs and your total down payment. This should include the annual property taxes, estimated mortgage rate, loan terms, and homeowner’s costs.

Tally up the total expenses. This is the money that you will need on a monthly basis. It’s important to be accurate about how much you spend as this dictates what you can reasonably afford. Then use a home affordability calculator to get a better idea of your home budget.

One way to be smart about how much home you can afford when you buy a home is to follow the 28/36% rule. If you max out your income to buy your dream home, it can put you in a bad spot financially. There should still be room in your budget for emergencies, retirement and other expenses. This rule of thumb says that you shouldn’t spend more than 28% of your gross monthly income on housing expenses and then no more than 36% on debt, which includes housing and other debt, such as credit card payments, car expenses, and student loans.

Depending on where you live, it’s possible that your annual income could be enough to cover the mortgage or, in some cases, it may fall short. Knowing what you can afford will help you decide how much you should have in the bank when you go to buy a home.

Expenses at Closing to Buy a Home

In order to buy a home, you need cash for the down payment and even more. There is a lot that you will need to bring to the closing and one of the big shocks of buying a house is finding out you need more to close on the home than just your down payment. It can be hard enough to save for the down payment and then to find out more can be disheartening.

The Down Payment

This is the part that is the most obvious to home buyers. It’s usually a percentage of the price of purchase. How much you will need for a down payment will depend. With many lenders, if you want to avoid having to pay private mortgage insurance then you will want 20% down. Coming up with this amount can be hard for a lot of first-time buyers so there are other options if you qualify for certain types of loans.

Closing Costs

Closing costs can run at 2% to 3% of the loan amount. The costs do vary from one state to another. This is because of the differences in either the real estate transfer tax or the mortgage stamps. They can also vary based on the different rates charged for attorneys, title insurance, and appraisals. Not only can the closing costs vary by state but also by the lender, due to the many home buying options there are. Each lender charges an application fee that can vary. Some lenders also charge points.

Prepaid Expenses

This is a confusing charge for many homebuyers but it is also necessary. With many mortgages, the lender puts real estate taxes and the homeowner’s insurance in escrow. This means that charges are included in the monthly payment and then paid by your lender when due. For this to happen successfully, the lender needs to collect amounts upfront to make sure funds are going to be available when they need to be paid. Depending on where you live, these prepaid expenses can come to as much as 2% of the loan. An option is to decline this escrow arrangement but in order to do this, you need to have 20% down.

Utility Adjustments

These adjustments can be a large number of charges but they aren’t usually more than a few hundred dollars. These charges represent utility costs paid by the seller in advance. For example, if the seller fills a heating oil tank before the closing then you need to reimburse the seller for the unused oil. This will happen during the closing. Another expense that may need an adjustment is a homeowners association fee. In some neighborhoods, fees are paid on a yearly basis. If the seller pays for these for a full year then you need to reimburse the seller for the months of fees that you are living in the house instead. Since these are usually direct expenses, the seller often doesn’t pay them.

Lender Required Cash Reserves

While this isn’t a closing expense, it can take some homebuyers by surprise. Lenders require that you have some cash left in savings after the closing costs are paid. The lender doesn’t want you to end up in early term default and so this requirement makes sure that you are able to make the payments during the first two months. The most usual cash reserve is two months. This means you will have to have sufficient reserves to cover the first two months of your payments. These funds aren’t going to be deposited with the lender. The lender will verify that you have these funds available. This can include verifying a checking account, savings account, or money market fund balance. You aren’t supposed to have these funds in a retirement account since it’s not a liquid source.

There are two alternatives that can reduce or even eliminate closing costs. You can negotiate with the seller to help pay your closing costs. This is only allowed in areas where this is common. You can also negotiate a price with the lender. This is where you then pay a higher interest rate on your mortgage in exchange for the lender paying the closing costs.

Determining the Cost of Moving

Besides what you need to bring to the closing table, you also need to consider the cost of moving when you go to buy a home. Moving costs can be a shock to some people. Moving can cost as much as $6,000 just for the movers. This also doesn’t take into consideration moving supplies, moving a car, and other heavy items. If you are moving out of state, the costs can be even more.

Figure out how much it costs to hire a moving company in your location and how much it could cost on your own, whether you are moving locally or farther away. Even if you aren’t going to pay for movers, you will still need to consider the cost of a DIY move. Figure out the average cost of renting a truck for a day and the cost of truck insurance for the rental. If you need help with the move, you want to save for the cost of having a POD at the home. Research the most expensive time of year to move. Moving companies may not have a lot of business during winter months since many people may not want to move then. If it works for you, consider moving during a non-peak season to save money.

Ongoing Homeowners Expenses

It’s not just closing costs you need to prepare for when you buy a home but also the ongoing expenses.

Mortgage Payments

Process gettinng a mortgageIt’s important to comparison shop when you are going to buy a home. Your interest rate is going to make a big difference in how much your payment is each month so finding a lender that will give you the lowest interest rate will be important. Monthly payments are the easiest cost associated with buying a house mortgage to predict. However, one mistake that some first-time homebuyers make is thinking that the mortgage is the total sum they will owe each month, just like rent payments, but that’s not the case.

Property Taxes

Taxes are usually paid twice a year but the laws and policies vary by county and state. A real estate agent can give you a rundown before you buy it. Local governments raise taxes in order to cover municipal expenses or projects so you can’t assume that this will stay steady. Increases in the home’s assessed value, whether it’s due to renovations or market conditions, can also cause taxes to rise, which can increase your payment if you have an escrow account with your lender.

Homeowners Insurance

Homeowners insurance can be built into your payment, just like property taxes. You will be required to have this insurance by your lender and the costs are based on a number of things. You can usually lower the cost if you bundle this policy with other insurance policies, such as life or auto.

Mortgage Insurance

If you have a down payment that is less than 20% then you will need to have mortgage insurance. The premium protects the lender in case you default. You can pay this upfront or have the premiums due each month in your mortgage payment. You can cancel this insurance when the remaining principal dips below 80% but for now, it will be an extra cost in your budget.

HOA or Condo Fees

If you are buying a condo or in a planned development that has shared spaces then you will have an extra monthly assessment on top of the mortgage payment. This pays for improvements to the complex or shared amenities, such as painting or landscaping. In a pricy urban area, a condo assessment can almost rival a mortgage payment so it’s important to pay attention to these costs.

Utilities

Once you have finished buying a home you may think you are done with financial hurdles. However, there are utilities, maintenance, and the occasional emergency. Some of these expenses you can budget for while others might surprise you. You may want to pad a homeownership rainy day fund so you have money to cover these problems, such as a water heater breaking. Having money set aside will prevent you from having to take on credit card debt. It’s best to have at least 1% of your home’s value in savings for maintenance and repairs.

Preparing to Buy a Home

If you have decided that you want to buy a home then you also need to convince a lender. This means that your credit will need to be in good shape and you don’t have a lot of debt. Lenders are looking for a variety of different metrics to see if you are too much of a risk to get home. How much you owe compared to how much you earn will also play a role in the approval process. In order to prepare for the mortgage process, you want to check your credit score and take a look at your debt. Do you have a credit card with a lingering balance that you are able to pay off? Little improvements you can make can boost your credit score and allow you to have a better interest rate and save money.

Also, try to do good lender research before you purchase a home. Make sure you are choosing the best option. You can always look for help here, on Loanry! By putting in your information below, you may find out if you qualify for any of the suggested, trustworthy lenders:


Getting the Best Interest Rate

A lower interest rate can save you a lot of money over the life of the loan so it’s best to get the lowest rate you can.

  • Credit Score: If you have found mistakes on your credit report then fix these. If you have time to work on your score then you should since this is a big factor in your interest rate.
  • Debt-to-Income Ratio: Start lowering the debt you have to make it easier to have room in your budget for a mortgage payment. When you pay off debt, you are in a better position to manage your budget and have resources in case you need them for emergency expenses.
  • Down Payment: A bigger down payment means you will get a better interest rate since it shows lenders that you are less risky. If you don’t have a large down payment now but are ready to buy, you may want to consider refinancing in the future. The faster you are able to lock in a lower rate, the more you will save on mortgage costs.

Are You Ready to Buy a Home?

Not only do you need to be financially ready to buy a home but you should be emotionally ready as well. There are some things you need to think about before you buy a home. Does your career mean that you need to have some mobility? Depending on where you live, it can take up to four years to break even and if you have career advancement or promotion in the next five years, will you have to relocate? If you plan on starting a family then you may outgrow your starter home before you know it. You might want to consider something big and look in a good school district.

When you are ready to buy a home, you need to determine the shelf life. How long do you think you will be there? Does your starter home make a good rental property that you can use for passive income in the future? Determine your life’s readiness. Do you have the time to handle maintenance, such as repairs and yard work?

Saving for a Down Payment and Closing Costs

One of the best ways to save for a down payment and the other costs it takes to buy a home is to transfer a fixed amount into special savings account each month. The next step would be to get on a budget and lower expenses as much as you can. Reducing high-interest debt will allow you to reduce your debt-to-income ratio, which helps your credit score and will enable you to put more toward your savings goals. Besides reducing expenses, you may also need extra income, which you can get through a second job or by looking into a side hustle.

There are different down payment assistance programs that you can use if it is just not possible for you to save enough for a down payment. There are other types of loans that don’t require you to save as much for a down payment but you do still need to pay for some of the closing costs so you will still need some money in the bank. While it’s not recommended, you can borrow from retirement in a pinch.

Conclusion

When saving enough for your new home, you need to consider a few things about buying a home. You will need to bring more to the closing table than just a down payment and some of the expenses may catch you by surprise if you aren’t prepared for them. Once you have enough in the bank for closing costs and a down payment then you also need to consider your other monthly home expenses, such as your mortgage payment and insurance. How much you need for your home will depend on different factors, including where you live and what lender you decide to go with for your mortgage.