Help & guide on the process on Purchasing Your First Home . PART 1.

Before you’re starting to look for a dream home, you need to define what you can afford. The first step is to understand your credit before to shop around for the mortgage and getting pre-approval. 


 Those steps you can easily do from a desktop computer and for FREE! 


  1. Get your FREE credit report. Your credit report contains a lot of personal and financial info. So, you will want to review it carefully for any mistakes in order to get the best loan and for your own safety. This way you can find a lot of unknown balances and potentially create the budget of things that you don’t actually need. Think subscriptions, memberships etc. If you find something wrong you should despite it! 

The best free online credit reports you can get from : EQUIFAX , EXPERIAN , TransUnion. 


2. Choose the best mortgage for you. You need to think - what I can afford? Only you can decide how much are you comfortable to pay for your dream home monthly. 

But the total monthly mortgage payment that Zillow providing you on the search is more than you just thinking. 

Additional expenses include : 

Principal & Interest.(PI) Principal is that amount you pay each month to reduce the loan. Interest is the amount you pay just to borrow money from the bank. My favorite calculator -

Mortgage Insurance. If you are putting down payment less than 20% from the purchase price than you required to pay PMI. 

Homeowner Insurance.(HI) If you work with a REALTOR he/she might help you to get from the seller annual home insurance when you buy a house. Otherwise, you can get an estimate for homes in your local area.

HOA. If they apply. When you buy a house in subdivision where often require homeowners association fee. 


Example: $1023 monthly mortgage payment + PI + PMI + HI + HOA = $ Monthly Home Payment .


But, how to estimate the % of your income on monthly home payment? 

Well, a general mortgage lender rule goes that your total monthly home payment should be at or below 28% of your total monthly income BEFORE taxes! To calculate use this formula: $ amount of your estimated total monthly home payment + Total of your Monthly Income x 100 = % of your income on monthly home payment.



Alright, you have calculated your comfortable total monthly home payment. But wait, you might have additional monthly payments beside your home. It might be - Car payment, student loan , credit card , child support . So now you need to subtracting all your monthly debts of your monthly income. Example: $5000 monthly income - $500 monthly car payment - $300 monthly credit cards - $1200 Student loan = Total monthly income minus all debts payments. 

Anastasia Lozhkina | REALTOR®



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