A few words about the procedure of getting a mortgage. I have noticed, that a lot of people, especially first home buyers, find themselves pretty much at a loss as to where to start, where to look and who to turn to, if you want to buy a home.

Certain details may fluctuate in our turbulent times, but the big conceptual steps remain the same, for they are not based on the whims of the market, but rather on common sense developed from them. Let’s take a walk, step by step.

Step One: first of all, you have to estimate how much of a home you can afford. Our Affordability Calculator can be of great help here. You can fiddle with parameters like Down Payment or Interest Rate to find out the maximum rate you can agree to and the most sensible amount to put down. In real life, however, you have to be prepared for other influential factors to pop up, your credit score being probably the strongest. Generally speaking, the affordability estimate you are making in the very beginning reflects only your personal financial capability; the credit score is important at a later stage, when a lender decides on the terms of your mortgage. I am drawing your attention to the score now only to point out, that if your score is far from perfect, the ideal combination of, say, the interest rate and the down payment you have calculated for yourself, may not be possible in real life. The low credit score puts you in no position to wish a lot from the lender, you will rather have to agree to whatever the lender offers to you. It should not stop you from shopping around for a better deal, though. On the contrary - the lower the score, the harder you have to look for both conventional and non-conventional offers. Even a minor difference in the initial conditions may make a big difference in the long run. Read the rest of this article »