Before starting your search for a home, let alone bidding on properties, you should know specifically how much money you will be able to borrow from the bank in the form of a mortgage loan. You will likely have a significant amount of money saved up for the down payment on the loan, but until you have a specific amount awarded to you, it will be impossible to know just how much money you will have in your budget for your new home.
Your first step to get your home search in Tennessee started should be to speak with your financial advisor about getting a mortgage loan in Knoxville. Once you have your rewarded amount, you will be able to begin your search and start bidding when the house calls for it.
How Much Will You Be Awarded?
Lenders these days ask for information regarding your employment status and monthly income, as well as your credit and rental or home ownership history. This information will allow the lender to know definitively how much money you will be able to afford to pay monthly mortgage loan payments. As a first-time buyer, you should be wary not to purchase a home that is beyond three times your monthly income. This is because, should you ever fall on hard times and are unable to make your mortgage payment due to overextending yourself with a high mortgage payment, your credit will be drastically impacted. Not to mention, you run the risk of potentially losing your home to foreclosure if you miss too many payments. Many homeowners will be approved for more money than they expected and run into these problems. Keep in mind that just because you were awarded more money than expected, it does not mean that you have to take it all and buy the biggest house with the best features. Instead, you should only borrow what you need.
Potential Expenses to Remember
Depending upon the seller from whom you are interested in purchasing, you will likely have to incur application fees that you forgot about before the process began. Some sellers are willing to include the fees in closing costs but this does not happen often if the seller has numerous bidders. Your conveyor, essentially the person who speaks on your behalf, will assist you throughout the purchase of your home. Conveyors are professionals who draft contracts, handle negotiations, and set up the transfer of funds from your bank to the seller once the house has been sold to you.
In addition to application fees, you should be prepared to make a significant down payment on your mortgage loan. The more money you put down up front, the lower your interest rates and monthly payments. Also, if there are a lot of bidders on a property and you want to stand out, you should arrange to pay earnest money to motivate the seller to take your bid. Paying earnest money proves to the seller that you are serious about buying the property.
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