Financing A Home
December 15, 2008 by Carl Chapman
Filed under Arizona Mortgages
How much canyou borrow and how much should you borrow?
Your credit, your existing debt, your current employment status, and how much money you have to put down on a home determines how much you can borrow and what type of financing your qualified to receive. What is your monthly payment going to be? Does that include taxes and insurance? You might qualify for a larger amount of money than you need to, or should, borrow. Once you find a lender or a mortgage broker, they can tell you how much you can borrow, and what types of mortgages are available.
If you know how much you want to borrow, you should have enough money saved to use as a deposit—the amount of your deposit can help to determine the interest rate you may qualify for, so the higher deposit, the lower the interest rate on the money you borrow. As a rule of thumb, most lenders are comfortable with the deposit money being 5% of the amount you want to borrow. Ten percent is even better
If you have less than 5% in deposit money, the lender may demand that you purchase an insurance policy that protects the lender in case you default on your loan. This can be quite expensive and it usually is in place until you have repaid a high percentage of your loan.
Is your credit damaged? Are you self-employed? Have you moved recently? There are other options besides mortgage brokers to use in financing a purchase of a home.
