The Quick Guide to Home Financing

It's an all too familiar monthly event: you write out a rent check and wait for the funds to disappear from your bank account. But what if instead of making endless payments on something you don't own, you could own a home of your own? When you finance a home purchase with a mortgage, you build equity and increase your percentage of home ownership with each payment made. "Homeownership may sound like a big step, but it's not as out of reach as you might think," says Eric Hamilton, President of Vanderbilt Mortgage and Finance. Vanderbilt Mortgage offers these tips to home financing to help you realize a place of your very own: Assess your financial situation. Before you even begin to look at homes, you should know what you can afford. Consider your debt-to-income ratio which is your monthly income compared to your total monthly bills. After figuring your ratio you will have a better idea as to what you can afford for a mortgage payment. To determine what your monthly mortgage payment might be, use an online mortgage calculator. Budget and save. Financing a home begins with budgeting to ensure you have an appropriate down payment. Be sure to set a realistic goal and use the idea of your future home as an incentive to stick to it. You can set up a savings plan, evaluate your current spending, and consider earning extra income to help reach your savings goal. Don't forget to celebrate your achievements along the way toward reaching your goal! Maintain your credit. There are a number of ways you can build your credit, ranging from opening a checking or savings account to paying all of your bills on time. Getting a secured credit card can also help to build your credit. Be sure to monitor how often you use the credit card and how much you spend so as not to create revolving credit debt. Try to minimize your outstanding debt and keep existing debts in check. Apply for a loan. Know ahead of time what information and documents you'll need to complete a home loan application to help make the application experience as easy as possible. Documents needed may include: proof of income, employment information from the past two years, state-issued identification, proof of residency, and your social security card. Brush up on home loan terms so you can be knowledgeable throughout the process. Stay on track with your payments. After you have moved into your dream home, be sure to make your mortgage payments in full and on time. If you can, plan an optional early mortgage payoff by making additional payments toward your principal balance each month. Care for your home. The financial responsibility of owning a home is just the beginning. You worked hard to finally get to this point, so why not keep your home in top shape? Create a home maintenance checklist and make a point to regularly go through it. Keep track of routine items like checking HVAC filters, cleaning the sink disposal and cleaning out the gutters. Follow this guide to fulfill your dream of owning a home.