Most of us are either thinking of getting one or already have one so for those who have done that give us your tips and for those who are thinking then read carefully. My tip is: When you buy a house the mortgage lender makes more money if you buy a more expensive house so their decision could be what's best for them and not for you. You know the state of your finances best so look for a deal and a house that you are comfortable with not what the lender says you can probably afford. If you are a bit wary about the monthly payments being a bit stiff then chances are its too high for you. Also take into consideration that you still have to save for a rainy day so most of your money can't go to the monthly payments.
I think the most important thing that I learned long before getting a mortgage is that they will approve you for more than you can actually afford. The bank apparently makes their calculations for how much you can pay in a monthly mortgage payment by assuming that you have basically no other expenses. Yeah, right. That's some good math guys. I know that we were approved for a mortgage that was twice what we actually got. We are barely hanging on as it is! I can't imagine if our mortgage was double! Not to mention that at that point we would not have been able to put down 20%, so then you have to pay even more. I don't quite understand how that all works, I just know that you get penalized for not putting down 20%.
I couldn't agree with you more. Several years ago we were preapproved for much more than we could have possibly afforded. We had told the lender how much we could afford for monthly payments but it didn't seem to matter to him. He kept pushing on us to get this loan and even tried to give us "creative ways" to afford it. We were smart enough to walk away. It took us several years but we finally bought a brand new home for monthly payments that we can actually afford. Right now our house payment is cheaper than our rent payment used to be. Always keep YOUR monthly budget in mind when dealing with a mortgage lender!
Mortgage lenders routinely did this when the housing market was hot. They wrote mortgages left and right for people who couldn't afford them in order to line their own pockets, but they just don't do this anymore. Those days are long gone and you have to basically prove that you can afford to repay the mortgage and make a lot of money in order to satisfy the rigorous criteria set forth by the lenders. You need to have a significant amount of money in the bank, great credit and a good income before they will even look at you these days.
Also - while you're looking at homes, remember: there's a way you can write up an offer that is "first right of refusal". If the home owner accepts, he/she can continue to show the house and if they get an offer they want to accept, they call you first to see if you want to buy it for that amount. It's something you'd have to ask your real estate agent about though, I wish I could remember what it's called.
I would suggest to start shopping for your Realtor as soon as possible. I think I went through a dozen before I found the perfect one. I don't think I am a demanding person, I just couldn't stand how many of them would be more than fifteen minutes late for an appointment, and wouldn't even bother to call me to let me know they would be late.
