Questions to ask yourself when deciding on a mortgage

Posted by Matthew Lahti on Thursday, May 2nd, 2013 at 10:52pm

Before you start looking for a home, consider the mortgage options you'd be able to accommodate.  When you figure out your financial constraints and the influence of other factors on the kinds of loans you'll be able to accept, you'll be in a better position to find a dream home that you can also pay for.

Income, savings and employment

What's your income and current employment situation? How much money do you have in savings? Your income, savings and job stability affect the amount of money you can hand over as a down payment and your ability to handle monthly mortgage payments and interest rates, including whether you choose a mortgage option with fixed vs. adjustable interest rates. 

To get a general idea of how much you're able to pay each month towards your mortgage, use the 28/36 rule.  For any given month, you shouldn't let your housing-related expenses exceed 28% of your pretax monthly income.  And at most, you should commit no more than 36% of your monthly income to paying off all your debts, including credit card and car payments.

Credit history

The kinds of mortgage rates you can get will also be determined by your credit history; a credit score over 680 is considered good, but you really have a sterling record when your score is at least 760.  Review your credit history to check for any errors that may be dragging your score down.  And ensure that you're doing what you can to improve your credit score, including making all payments in a timely fashion.

Length of stay

How long would you want to stay in your home? Ask yourself if you might need to relocate in the near future.  The move could be motivated by your job; it's possible that you might want to make a career change at some point or that your employer might require you to transfer to a different location.  You may want to move in order to be closer to your adult children or to aging parents, or because of other plans you've made for a certain stage in your life.

Requirements for special loans

When considering different mortgage options, see if you meet the requirements for certain kinds of special loans and look into whether they would serve your needs.  For instance, there are different kinds of VA loans available to veterans and certain options for people with low income.

Once you've answered these questions, you'll be in a better position to discuss mortgage options with a lender and look for homes.  If you're currently considering a home in Southwest Washington State, contact us.  We'll review different mortgage and housing options with you and help you find a home in an area of the country that's full of natural beauty and the potential for a healthy, high-quality lifestyle.

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