NMFN: LC, LE, FM, Buying Your First Home

Owning a home is, without question, one of the key milestones of life. With the excitement of purchasing a new home comes the reality of a mortgage. Some wonder if they are ready for the responsibility. Others fear they don't have enough money. The process of buying your first home can be overwhelming, but by taking the proper steps and learning as much as you can about the process, you'll be prepared for the challenges ahead.

Do You Qualify?

Based on your lifestyle, consider how much you are willing to spend on the purchase of a home. In some instances, a prospective home buyer may not be willing to invest as much of their income toward a house as they can afford.

Income
Your income will be critical in determining how much you can afford to pay for housing-related expenses. Different loan programs have different rules regarding the percentage of income you can apply toward monthly mortgage payments. Government loan programs (FHA and VA) generally allow you to apply a higher percentage of your income toward a loan.

Debt
A lender will consider your current debt when determining your ability to qualify for a loan. Loan programs have different rules to determine the percentage of income that can be applied towards long-term debt.

Lifestyle
The purchase of a home may increase your monthly household expenses. It may also reduce the amount of money you have to maintain your lifestyle. Housing-related expenses are another category a lender may consider and you should calculate the impact they will have on your budget.

Where Do You Begin?

There are many resources you can refer to when buying your first home. Talk with trusted and experienced family members and friends to give you a realistic look at the home-buying process.

The Ginnie Mae web site, http://www.ginniemae.gov, contains a number of calculators and information to help you determine how much you can afford, a monthly mortgage calculator, types of mortgages available, and help in finding a lender.

Plan for the Unexpected

A new home can have a large impact on your standard of living. You now have a rather large outstanding debt. If you or your spouse should die unexpectedly or become disabled, could you hold on to your dreams with one income? Review your financial plan with a Northwestern Mutual Financial Network Representative. Protect your new investment and welcome home.