Home Mortgage Loans

A home loan typically is the largest debt a consumer has. Choosing a mortgage is a big decision, and one that must consider many variables.

One of the biggest mistakes home buyers, particularly first-time home buyers, make is underestimating the expenses related to owning a home—including maintenance costs, repair costs, property taxes and homeowners insurance. That can lead to credit problems, after you’ve gotten a mortgage.

The taxes and insurance on a home can be especially expensive. And the cost is magnified is you borrow heavily to buy the house.

Still, owning a home is a good goal—both personally and financially. People rarely lose money owning a home…and usually make money doing so. Home ownership also tends to improve people’s financial circumstances and attitudes, generally.

Once you’ve analyzed all of the costs associated with your new home, as well as your other monthly expenses, you should have an idea how much you can afford to pay each month for your mortgage. At this point, you’re ready to talk to potential lenders—before you start shopping for a home.

Next: Qualifying Ratios