Do You Need Private Mortgage Insurance?

Do You Need Private Mortgage Insurance?

Home-Buying Preparation Tips For Your Next Real Estate Purchase

by Luke Fields

When you are ready to start the process to buy a home and search for the right one, there are still some details you need to take care of so you are fully prepared for the search and the purchase transaction. Here are some recommendations, which you can use in your home-buying preparation to get your situation in order and prepared for the purchase.

Inquire Into Your Credit

One of the first steps you can take before you buy a home is to check out your credit situation. This step is one in which you can start early on, even several months or years before you begin to home-shop. Request a copy of your credit report with each of the three main credit bureaus, which will list details that appear on your credit file. This information is what can make a big difference in your home purchase and how much you pay for the financing, and it is in your interest to know what is on it.

After you have reviewed your credit report, you can work on repairing your credit if it needs improvement, and you can also correct any erroneous information that may be listed. Review all the details of your credit report, such as your address and address history, your date of birth and social security number. You can request to correct any wrong information directly with the credit bureau supplying it to you.

Look at Your Buying Limit

This step in the process is one that you can do with the help of your mortgage broker or loan officer. First, you want to determine how much you can afford in your household budget after all your other expenses are considered. You can do this easily with a sheet of paper and a pen: list all your expenses and subtract them from your take-home pay. Don't forget to include unusual expenses, such as personal care, clothing, eating out, and dry cleaning costs. 

Once you know how much of your monthly budget you can put toward a house payment, talk to your mortgage broker about qualifying for a mortgage. When they pre-qualify you, they will look at your credit and your income to determine the maximum amount. 

Next, your mortgage broker will look at various loan programs and lock you into one with a favorable rate and terms. Based on the interest rate for your loan you are qualified for, you will be able to calculate a mortgage payment of principal and interest. Don't forget to include homeowners insurance premiums and the property tax, which are both usually paid on a monthly basis from your mortgage payment and held in an escrow account.

So when you're ready for a home, use these tips to look at Arbors homes for sale.


About Me

Do You Need Private Mortgage Insurance?

Welcome to my website. My name is Larry Silva, and I want to talk a bit about private mortgage insurance. You may have heard the term PMI mentioned when you were in the process of purchasing real estate. When I first heard my lender talking about PMI, I was very confused. It was my realtor who sat me down and explained what private mortgage insurance was and when someone is required to purchase it. He told me that PMI is not lifelong insurance; it can be cancelled when the mortgage principal balance reaches a certain point. Once it was explained to me, private mortgage insurance was no longer a mystery or a confusing concept. I would like to pass on what I learned and hope that you find it to be of value.