How Much Can I Afford? (Step 1) 1.A crucial step in finding the right home is to first determine how much you can afford to spend on your new home. First, let's calculate an affordable monthly payment. To calculate this value, we will use a housing-expense ratio of 33%. This means that 33% of your monthly income can be spent on mortgage payments, including property taxes and insurances. Take your gross (before taxes) income each year and divide by 12 to determine a monthly income. Multiply the monthly income by 33% (.33) to calculate an estimated monthly mortgage payment. (gross income)/(12)=(monthly income) X (.33)=Estimated Monthly Mortgage Payment Example: Bob makes $60,000 a year. Therefore his monthly income is about $5000. If he has a housing-expense ratio of 33%, his monthly mortgage payment will be $1650 (5000 X 0.33). 2.Now, to determine the price of a house you can afford, choose an interest rate between 7.500% to 10% and use this mortgage calculator. 3.After you have determined the affordable cost for your new home, it is important to contact real estate brokers in the area that you are planning to purchase a home. They can provide you with listings for houses available in your price range and which suit your personal needs. You've Found The Perfect Home. What Next? (Step 2) 1.Once you have found a home to purchase, it is time to contact the seller. Sometimes the seller will be an individual or she may be a representative of a real estate agency. Make your offer on the home, based on the amount that you can afford. 2.The real estate broker will contact the seller with your offer and negotiations can begin. The buyer and the seller must reach an agreement for the sale price of the home. This part of the process involves drawing up a sales contract. 3.Once the seller and the buyer agree on a price for the home, they both must sign the ratification of the sales contract. Applying for a Mortgage (Step 3) It is now time to find a loan program to suit your financial needs as a buyer and a homeowner. Go ahead and fill out the preliminary loan application ONLINE! Nationwide Mortgage,RI will find the best loan program for your needs. Working with a mortgage broker, such as NW Mortgage can benefit you by providing you a wide range of mortgage options, such as; Adjustable Rate Mortgages or Balloon (Payment) Mortgages or Fixed Rate Mortgages. Finding a good rate and mortgage payment program is an essential step in buying a home because it could save you thousands of dollars. Let's establish a loan amount of $80,000.00. This will be considered a conforming loan. The rules for conforming loans apply to loans of less than $227,150.00. Jumbo Loans cover the loans between $227,150.00 to $650,000.00. Mortgage brokers can offer you various programs such as 30 year fixed and 15 year fixed, each with fluctuating rates. Each type of mortgage program has benefits depending on the buyer's financial situation and preference. In this example, we will choose the 30-year fixed program with a rate of 8.125% with no points. What are points? A dollar amount paid to a lender for making a loan. A point is one percent of the loan amount. If the buyer had chosen a rate of 7.875% with 1 point, the lender would receive 1 percent of the loan amount. This would be equal to $800 (80,000 X 0.01). Our mortgage calculator can generate the monthly mortgage table for you. Usually the rates are quoted by lenders for a 30 day lock rate. This means the closing of the loan should occur within 30 days of the lock-in date for the specified rate. Approving your loan application (Step 4) It is now up to the Nationwide Mortgage, RI to get your loan approved. A standard fee of $357 is requested to pay for the appraisal of the property and the credit report. You should engage the services of a licensed title agent to perform the settlement process. All the supporting documents are gathered by our professional loan processors to be sent to the lenders. Such documents shall include the uniform loan application, a verification of employment, a credit report obtained from the credit bureau, the appraisal, a copy of the sales contract, a verification of deposit fee (for the down payment), and other documents. These are prepared for review by the underwriter. The lender's underwriter will review the information pertaining to your loan and choose to approve, deny, or suspend your loan. The underwriter reaches the decision depending upon the buyer's house-expense ratio and debt-to-income ratio, your credit history, your employment, the property appraisal, or the LTV, or loan-to-value ratio, and any compensating factors that exist. Coordinating Settlement (Step 5) Congratulations, your loan was approved. It is now time to make arrangements for settlement, the closing of your loan. After the approval of the loan, there may be conditions to be satisfied before closing. These conditions should be handled at least a week before the closing date. Our closer at Nationwide Mortgage, RI will contact the settlement agent you have chosen to check on the progress of the work they've done for you. Within a week of your chosen settlement date, you will be contacted by your settlement agent to inform you of the exact costs to close the transaction. Settlements generally run very smoothly and last about 60 minutes. You will be required to sign numerous documents relating to the purchase or refinancing of your property. Your settlement agent will be able to answer any questions regarding the documents, and Nationwide Mortgage, RI will be happy to assist you in any way possible. We're happy to have guided you through the loan process. We hope to be of further assistance to you when you need us next.