Knowing you want to purchase a home and being ready to purchase a home, are two different things. To be ready to purchase a home, you need to be ready to go through the mortgage process, which can be complicated.

1. You Need to Save for a Down Payment

If you want to buy a home, you need to have some money saved up. Although many programs can reduce the size of your down payment, there are very few circumstances where the down payment is completely eliminated. Even if the down payment is low, it is helpful to be able to put down a sizeable down payment. A significant payment will reduce the amount of money you have to borrow and will reduce the overall cost of the home in the long-term. Putting down a larger down payment will also ensure that you have some equity build-up in the home from the very start of the homeownership process.

2. You Should Know What You Can Afford

Many people make the mistake of letting the banks tell them what they can afford based on the loan size that they are approved for. The truth is that the banks are telling you the maximum amount of money that they feel comfortable lending you, not what you can afford. You know your personal expenses and what you can afford. A good rule of thumb is to keep your mortgage payments at or below 25% of your take-home pay. That way, your mortgage payment will not eat up your entire take-home pay, and you will have money for other bills and expenses.

3. Your Circumstances Matter

When applying for a mortgage, your circumstances matter. The lender has the right to ask you for detailed information about your place of employment and income levels, the type of debt you are carrying, and what type of assets you have.

If your circumstances are not good, you are going to want to try to improve your circumstances before applying for a loan. For example, if you are carrying a lot of debt, try to pay it down. If you just started a new job, try to wait until you have been at your place of employment for six months to a year before applying for a loan. Your circumstances matter, so you should improve your circumstances before applying for a loan.

If you feel you are ready to own a home, make sure you are ready for the mortgage process. You need to save for a down payment and make sure your circumstances are optimal for obtaining a loan. Additionally, you need to know what you can afford to pay for a home. Contact home mortgage providers to learn more.