Home Buying

You’re ready to be a homeowner. Do you know just how much cash you need to buy that home? The total cash needed upfront to close your mortgage is known as “cash to close.” Once you’re in the mortgage process, your lender will give you that number, but before you start the process, it’s good to understand what cash expenses are involved in purchasing a home.

If you purchase a home with a conventional loan and your down payment is less than 20% of the purchase price, you will pay PMI (private mortgage insurance) as part of the mortgage payment. PMI allows you to obtain a conventional loan with a lower down payment. This insurance fee is added to your monthly mortgage payment.  

Mortgage lingo can be confusing. One of the first distinctions between terms that you need to know is the difference between prequalification and preapproval for a loan. The difference is significant.

The mortgage loan process is both straightforward and unique and specific to each individual based on their finances. The challenge most people face is gathering the information and documents needed. The mortgage broker and loan processor will let you know when additional information needs to be provided or updated throughout the process.

Your debt-to-income ratio (DTI) compares your monthly debt payments to your monthly gross (pre-tax) income. It’s the percentage of your income that goes toward paying off debt each month.

It’s easy to dream when thinking about buying a home. You may have already started looking at houses. Before you get your heart set on a neighborhood or home, it’s smart to take the time to determine just “how much home” you can afford.