The best advice you will ever be given as a Chicago first time home buyer is to be pre-approved before you start looking for a home. Pre-approval makes it easy to know how much you can spend, and will therefore help you know what sort of house to look for.

Getting pre-approved will give you peace of mind while you are looking for a home. Pre-approval doesn’t obligate you in any way, and it is free, so there is no good reason not to get one. Your local lending institution can give you a written pre-approval with no obligation on your part. When you are pre-approved you know how large a mortgage you can get based on your ability to make payments up to a certain level. That’s like having money in the bank.

Every Chicago 1st time home buyer should carefully consider the level of monthly payment they can handle. When you are applying for a pre-approved mortgage you will find out how much you can borrow. You won’t always want to go for the maximum amount available to you. It depends how large a payment you are comfortable with. That will determine the price range of home you should be looking for.

Select the type of mortgage that will best suit you. Not everyone will want the same type of mortgage. There are several factors to consider which have a bearing on how much you want to pay on a monthly basis. Ask yourself how long you expect to stay in your new house and how much your current earnings might change in the near future. These things will have a bearing on how you should structure your mortgage.

Payment frequency options can make a big difference to your bottom line. Over the long term making bi-weekly or even weekly payments can save thousands of dollars in interest. Every little bit extra you pay against the principal will reduce the interest you pay. A bi-weekly payment plan, for example, will result in you actually making the equivalent of 13 monthly payments instead of 12. That extra payment is put directly against the principal.

Family May 19th, 2010