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Can you afford to buy a home?

Mike and Judy Malone

Figuring out what you can comfortably afford means knowing the major things you need to budget for when you buy a home. From one-time expenses like the down payment to ongoing costs like taxes and insurance, talk with your lender and have them help you translate that payment into a realistic mortgage.

Working out a monthly household budget will be helpful to determine the monthly payment that comfortably fits your budget.

Consider pre-qualification. While it doesn’t give you a loan commitment or guarantee, it’s a good first step to see the amount and type of loan a lender could offer you.

As you move forward, keep in mind that your income, debt, credit history, down payment and savings, the home’s value and your loan program’s guidelines will all play a role in whether your loan application is approved.

If you have already selected a lender, get in touch with them and submit your application. To apply for a home mortgage, you’ll need to provide your lender with documentation to help verify your employment history, creditworthiness and overall financial situation.

Be prepared to provide the following:

W-2s (for the last two years)

Pay stubs (two most recent consecutive)

Bank statements for all financial accounts, including investments (for the last two months, all pages)

Signed personal and business tax returns (all pages and relevant schedules)

If self-employed, a copy of your most recent quarterly or year-to-date profit/loss statement

When you’re considering buying a home, the amount of your down payment plays an important role. A down payment is a percentage of your home’s purchase price that you pay up front when you close your home loan. Lenders often look at this down payment amount as your investment in the home, so it plays an important role.

So how much will you need?

That depends on the purchase price of your home and your loan program. Different loan programs require different percentages, usually ranging from 3.5 to 20 percent.

If you are having trouble saving for a down payment, you should know that certain lenders offer or participate in programs that could enable you to qualify for down payment assistance. The Regional Housing Alliance (www.rhalpc.org) provides down payment assistance to qualified La Plata County residents.

Choose a real estate agent to help with buying a home. A good agent can guide you by giving you information based on experience and market knowledge. An agent can help you to avoid making mistakes such as choosing the wrong home or offering too much.

Mike and Judy Malone are vice presidents and loan officers (NMLS 449954/449953) at Heartland Mortgage in Durango. Reach them at mmalone@heartland-bank.com or 375-2265.



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