How much money should you put down on a home?
You have had your eye on a home and the timing is right to buy a new house. How much cash should you put down? According to Nerd Wallet, there are benefits of a 20 percent down payment. Lenders like this guarantee as a lower down payment makes you a bigger risk to them. The advantages of 20 percent, or more will serve you well and you will probably earn lower upfront fees, a lower monthly payment and a better mortgage interest rate, plus you will have equity in your new home right from the start.
How much house can you afford?
Bank Rate suggests following the 36 percent rule to determine how much house you can afford. And most financial advisors agree that you should spend no more than 36 percent of your gross income. This amount should serve as a baseline for your new mortgage to give room for living costs such as maintenance and utilities.
Should I get pre approved by a bank?
Pre approval from a bank is also a step in the right direction to see how much spending power you have before you begin your new home search. Credit Karma suggests it should be among the first steps you take because it gives you an idea of how much you can borrow. It also lets buyers know you can afford to purchase the home they are selling.
What is the difference between a 15 - 30 year fixed and an ARM?
A suggestion by Nerd Wallet is if you are ready to settle in a community you love, if you are settled in a career, or have a growing family a traditional 30 or 15 year fixed rate mortgage is your best bet. Fixed rate loans (does not include fluctuation of taxes, or homeowners insurance that could increase your mortgage payment) never change and are locked in. If you might be moving every couple of years, an adjustable rate might be right for you. Typically lower interest rates are offered with an ARM adjusting after the five year period.
For any questions you may have about your next loan, contact our partners with BankSouth Mortgage, Jessica Jakulski or Jan Wagner.
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