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a lender talking with a home buyer about a mortgage

The Crucial First Steps to Home Financing

Searching for a home in the Canton area is exciting. You’ve created your list of wants and needs, dreamed about home décor, signed up to see new homes before they come on the market, and spent what seems like hours scrolling through online photo galleries of your favorite homes.

But financing, while it is a crucial step toward buying a home, is not as exciting as the home search. To help make the thought of financing simpler, we want to talk about the first steps to financing today.

Step 1: Create a Budget

The first step to financing is finding out how much you can afford. A mortgage pre-approval can help you determine how much you can afford, and we will talk about that in a further step. Budgeting for a home is another method.

a calculator and budget sheetHere are some percentages to consider when creating your budget:

  • A down payment is typically 20%.
  • Your principal, interest, taxes, and insurance should be at most 28% of your gross income.
  • Your total debts (debt-to-income ratio) should be at most 36%.

Step 2: Check Your Credit

After you’ve created your budget, check your credit score. A higher credit score means you can get a loan with a lower and better interest rate on your mortgage.

Step 3: Get Pre-Approved for a Mortgage

a buyer checking boxes on a checklistOnce you have created your budget and learned how much home you can afford, and once you have checked your credit score, it’s now time to get pre-approved for a mortgage.

Pre-approval is one step beyond pre-qualification, which is simply an estimate of what you could afford based on the basic information you give the lender. For a mortgage pre-approval, however, the lender carefully considers your finances, credit history, and the documentation you have provided to give you the exact loan amount you would qualify for.

We recommend getting pre-approved for a mortgage instead of pre-qualified. You can read our blog post about why pre-approval helps you more as a home buyer to learn more.

Choose Bittinger Team, REALTORS® to Buy Your Next Home

We know there is more to buying a home than simply finding the best property in the best neighborhood. We want to share helpful home buying resources and local area information with you to make sure you can easily find and buy your next home in the Canton area.

If you have any questions about the home financing process, please call us at (734) 459-2600 or email us at We would be happy to provide you with the answers you are looking for.

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