Getting a Jump-start on Your Financial Plan for Homeownership
- 2 min
What you'll learn.
- How to plan for homeownership
- Planning for your mortgage payment
- Planning for down payments and closing costs
So, you’re planning on how to manage the purchase of your biggest asset, a home. How exciting! Getting the jump-start on your financial plan for homeownership is a process. It takes thought, preparation and financial planning. You’ve started your search in a great place, we’re here to help guide you to a solid launching point.
During this jump-start process it’s not only about the price of a home, but it’s about preparing for the mortgage, down payment, and closing costs all involved with the purchase. It’s important to understand the importance of the role they play in the lending process.
The mortgage payment (one to five years of planning)
We’re starting with the overall monthly payments you’ll be prepared to make by taking a deep dive into your finances. Here’s what we’re looking at: your debt-to-income ratio, your FICO score and your credit history. Going into this process, you should know that shopping for a home is fun, but don’t get caught up in that being your first step on the home buying journey.
We want you to go into this knowing just how much you can afford. We will weigh all options with you so that you’re ‘in the know’ before you find the home of your dreams just to learn you can’t afford it.
The down payment (one to five years of planning)
How do you intend to fund your down payment? Your lender will need to know and will need proof of funds, so you’ll be required to provide bank statements, stocks and investments, the sale of assets, or a settlement statement if you’re using funds from a property sale.
After you’ve met with us and you’ve decided which loan program you intend to choose, you’ll know just how much you need to put down. Let’s say you went with a 20% down payment; you need to make sure you’re ready for that by planning for your future. That’s why saving is so essential. Just know that there are other options if you can’t save that 20% in the near future or if you don’t think that goal is obtainable.
The closing costs (one to two years of planning)
Once you’re pre-qualified and ready to get the loan process started, you’ll first receive the loan estimate. This is an estimate of what you can expect over the life of the loan. Within this you’ll find the closing costs. What are closing costs you might ask? Closing costs are things that must be paid in order to close on your home, like property taxes, homeowners insurance, title search fees, appraisal fees, etc. Services completed and costs involved in the loan process need to get paid. All of those fees and expenses are lumped together under the umbrella of closing costs.
Getting financially prepared is the first step on this journey. Having a clear understanding of the financial terms and meanings of each will streamline the process for you. If you have any other questions, don’t hesitate to reach out. We’re here to help you make that jump into homeownership!