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Read This Before You Apply for a Mortgage

Buying a Home - Read This Before You Apply for a Mortgage

Our real estate agents often hear from our new clients that the process of getting a mortgage is intimidating. That's understandable!

Having an experienced real estate agent on your side does a lot to make applying for a home mortgage manageable.

Even so, it's important to know a few things about the process. Once you learn more, you'll see exactly what you need to do to make things easier.

That can be just what it takes to make your worries evaporate. The truth is, most people learn getting a mortgage is quite a bit easier than they imagined. It just takes some preparation.

These four steps will make it easier:

  1. Get the Right Paperwork Together
    No matter what type of home mortgage you want, you'll need to document income before you can finish your application packet. This almost always requires a month of recent pay stubs from anyone on the loan and the last two years of tax filings. You'll also need at least three months of bank account statements – but collect six months' worth just in case.

  2. Know the 28/36 Rule
    The 28/36 Rule is a widely accepted, unofficial principle of mortgage lending.

    It goes like this:
    • Your monthly mortgage payment should be no more than 28% of your gross income.
    • All monthly bill payments you make should be no more than 36% of gross income.

    This isn't a hard and fast rule, and it doesn't always apply to government-backed mortgage programs such as those for first-time homebuyers. However, it'll give you a sense of how big a mortgage you may qualify for. The sooner you write out a budget, the more you'll know about your situation.

  3. Get Insight on the Market
    A good real estate agent is a walking encyclopedia of knowledge on the local market.

    Each real estate market has its own quirks, and some of these can influence how easy it is to obtain mortgage funding. Luckily, you won't have to search high and low to get the facts you need. Simply ask your real estate agent if there's anything special you need to know.

  4. Start Saving Soon
    The less debt you have, the better off you'll be when it comes to home financing.

    Ideally, you should start saving for six months to a year before you apply for a mortgage loan. There are two ways you can use any extra funds that will both be beneficial to you:
    • One, paying down any existing debt, such as credit card debt and car loans.
    • Two, saving cash so that you can provide a larger down payment on a home.

    Your financial situation dictates the best move for you. For example, paying down old credit debt will relieve you of some money worries and may make it easier to spend on your home.

    In some situations, having a big down payment isn't a priority. However, a down payment will cut the amount of money you have to finance and may even improve your interest rates.

  5. Getting a Good Mortgage Loan Package Comes Down to Dollars and Sense
    Make a few moves to improve your financial health – and choose the right home for your budget – and you could find getting a mortgage is a snap.

We help buyers with many different financing needs to achieve the dream of homeownership. To find out more, contact Cressy & Everett Real Estate.


How to Pay Your Home Off Early

Pay your home loan early

A home mortgage is a commitment that affects your financial picture for a good portion of your life. It's a big ambition, but paying off your home mortgage even a little bit early can save you thousands of dollars over time. Our real estate agents have put together this list of ways to pay your home off early.  

Three Ways to Pay Off Your Home Loan Much Faster

Savvy budgeting and a commitment to "stick to the plan" will serve you well in your quest to pay your home loan off early. When it comes to any big goal like this, adopting a number of small, helpful habits is your best bet. By chipping away at your mortgage payment every month, you'll get closer to your goal.

  1. Kick In an Extra Payment 
    Making extra payments to the principal of your home loan adds up. Just one extra payment per year can shave years off your mortgage.

    Many people swear by the concept of the biweekly payment: Here, you pay half your regular payment every two weeks instead of the full payment every month.  Since there are 52 weeks in a year, this results in an extra full payment annually.

    In addition, rounding up your payment can make a noticeable difference as well.  When you come across some extra money--like a tax return or a holiday bonus--you always have the option of using it for your mortgage expenses.

  2. Refinance Your Long-Term Mortgage
    When you were searching for a mortgage lender, you probably learned all about Annual Percentage Rate or APR. APR is a measure of how much interest you can expect to pay on your mortgage over time. All other factors being equal, a lower APR is better. Unfortunately, it's often hard to find a truly outstanding APR unless the real estate market is strongly favoring home buyers.

    Once you've had your mortgage a year or so, start monitoring the market and keep your eye out for refinancing deals. Refinancing can be a complex process, but doesn't involve many out-of-pocket costs and will cut down on your total mortgage investment going forward. If you find a favorable refinancing loan, there's rarely any reason not to go for it.

  3. Downsizing Your Home
    If you are interested in replacing your large mortgage payments with smaller, more affordable payments, downsizing your home may be the way to go.

    By selling your larger home, you may be able to use the profits from that sale to buy a smaller, more affordable home and reduce your overall debt.  The smaller the balance on your new home loan, the easier it will be to pay off more quickly.
    Contact Cressy & Everett Real Estate for expert help and advice when you're buying or selling your home.
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Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information on this site was last updated 08/19/2022. The listing information on this page last changed on 08/19/2022. The data relating to real estate for sale on this website comes in part from the Internet Data Exchange program of MichRic (Michigan Regional Information Center) (last updated Thu 08/18/2022 11:17:18 PM EST) or GNIAR MLS (last updated Fri 08/19/2022 6:17:51 AM EST) or IRMLS (last updated Thu 08/18/2022 11:11:59 PM EST). Real estate listings held by brokerage firms other than Cressy & Everett Real Estate may be marked with the Internet Data Exchange logo and detailed information about those properties will include the name of the listing broker(s) when required by the MLS. All rights reserved. --

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