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Home-buying Resources

Home Loan Toolkit:
A step by step guide

This consumer-friendly booklet can help you as you think about, apply for, and close on a mortgage.​

How can this toolkit help you?

Buying a home is exciting and, let’s face it, complicated. This booklet is a toolkit that can help you make better choices along your path to owning a home.

After you finish this toolkit:

  • You’ll know the most important steps you need to take to get the best mortgage for your situation
  • You’ll better understand your closing costs and what it takes to buy a home
  • You’ll see a few ways to be a successful homeowner

Why us?

We’re transforming the way people think about financing their home. We’re also building a team that proactively tackles the challenges that come with getting a mortgage. Learn more about why we do what we do.

Fixed vs Adjustable?

For most loan types we offer, you have the option of choosing between a fixed or adjustable rate. We explain the benefits and drawbacks of each so that you can make the best decision for your situation.

How can this toolkit help you?

Buying a home is exciting and, let’s face it, complicated. This booklet is a toolkit that can help you make better choices along your path to owning a home.

After you finish this toolkit:

  • You’ll know the most important steps you need to take to get the best mortgage for your situation
  • You’ll better understand your closing costs and what it takes to buy a home
  • You’ll see a few ways to be a successful homeowner

Choosing the best mortgage for you

To make the most of your mortgage, you need to decide what works for you and then shop around to find it. In this section, you’ll find eight steps to get the job done right.

To make the most of your mortgage, you need to decide what works for you and then shop around to find it. In this section, you’ll find eight steps to get the job done right.

1. Define what affordable means to you

Only you can decide how much you are comfortable paying for your housing each month. In most cases, your lender can consider only if you are able to repay your mortgage, not whether you will be comfortable repaying your loan. Based on your whole financial picture, think about whether you want to take on the mortgage payment plus the other costs of homeownership such as appliances, repairs, and maintenance.

The Talk

Ask your spouse, a loved one, or friend about what affordable means to you:

“ What’s more important—a bigger home with a larger mortgage or more
financial flexibility?”

“ How much do we want to budget for all the monthly housing costs,
including repairs, furniture, and new appliances?”

“What will a mortgage payment mean for other financial goals?”

Think about what an affordable home loan looks like for you. These worksheets can help. First, estimate your total monthly home payment. Second, look at the percentage of your income that will go toward your monthly home payment. Third, look at how much money you will have available to spend on the rest of your monthly expenses.

Step 1. Estimate your total monthly home payment by adding up the items below

Your total monthly home payment is more than just your mortgage. There are more expenses that go along with owning your home. Start with estimates and adjust as you go.

Step 2. Estimate the percentage of your income spent on your monthly home payment

Calculate the percentage of your total monthly income that goes toward your total monthly home payment each month. A mortgage lending rule of thumb is that your total monthly home payment should be at or below 28% of your total monthly income before taxes. Lenders may approve you for more or for less depending on your overall financial picture.

Step 3. Estimate what is left after subtracting your monthly debts

To determine whether you are comfortable with your total monthly home payment, figure out how
much of your income is left after you pay for your housing plus your other monthly debts.

Step 4. Your choice

Why us?

We’re transforming the way people think about financing their home. We’re also building a team that proactively tackles the challenges that come with getting a mortgage. Learn more about why we do what we do.

Fixed vs Adjustable?

For most loan types we offer, you have the option of choosing between a fixed or adjustable rate. We explain the benefits and drawbacks of each so that you can make the best decision for your situation.

2. Understand your credit

Your credit, your credit scores, and how wisely you shop for a loan that best fits your needs have a significant impact on your mortgage interest rate and the fees you pay. To improve your credit and your chances of getting a better mortgage, get current on your payments and stay current. About 35% of your credit scores are based on whether or not you pay your bills on time. About 30% of your credit scores are based on how much debt you owe. That’s why you may want to consider paying down some of your debts.

Research Starter

Check out interest rates and make sure you’re getting the credit you’ve earned.

TIP

Be careful making any big purchases on credit before you close on your home. Even financing a new refrigerator could make it harder for you to get a mortgage.

TIP

Correcting errors on your credit report may raise your score in 30 days or less. It’s a good idea to correct errors before you apply for a mortgage.

To help you navigate the steps you have to take to get a mortgage, take a look at our new booklet, “Your Home Loan Toolkit: A Step-By-Step Guide”. This consumer-friendly booklet can help you as you think about, apply for, and close on a mortgage.

The toolkit helps you calculate how much you can afford for a home, and features worksheets and checklists to fill out during the process. “Your Home Loan Toolkit” is a resource we revised to help make the mortgage process more understandable.