Well, I guess most people start thinking about buying a home by looking at houses.

And I understand that. Looking at kitchens, backyards, and neighborhoods is a lot more enjoyable than gathering bank statements and talking about monthly debts.

But if you think you may buy a home in the next few months, the best place to start is not with a house. It is with a conversation about where you are financially, what you want, and what payment would feel comfortable.

I recommend having that conversation two or three months before you plan to shop. It gives us time to look at the whole picture and address anything that may need attention before you find a home you love.

Start with the payment, not the purchase price

One of the first things I ask is what monthly payment feels manageable.

That may be different from the largest payment somebody could qualify for. At the end of the day, this needs to fit your life. You still need room for groceries, utilities, repairs, travel, children, and everything else that does not disappear when you buy a house.

A complete housing payment can include more than the amount borrowed and the interest charged. It may also include property taxes, homeowners insurance, mortgage insurance, and homeowners association dues.

The Consumer Financial Protection Bureau’s homebuying guidance also recommends thinking about closing costs, moving expenses, repairs, and the other costs that come with owning a home.

The right number is not simply what looks good on paper. It is what you can live with comfortably.

Look at the whole financial picture

A mortgage decision is not based on one number.

We will generally need to look at:

• Your income and how it is documented

• Your current monthly debts

• Your credit history and credit scores

• The money you have available for a down payment and closing costs

• The type and price of the home you are considering

• Any financial changes you expect in the near future

One term you may hear is “debt-to-income ratio.” That is simply a comparison between your monthly debt payments and your gross monthly income before taxes and other deductions.

Different mortgage programs can have different limits, so the number is not considered by itself. The Consumer Financial Protection Bureau explains debt-to-income ratios in more detail.

My job is to put those pieces together and explain what they mean in plain language.

Review your credit early

You do not need to have perfect credit before we talk.

Credit is important, and it can affect the mortgage options, interest rate, and costs available to you. But it is still one part of a larger financial picture.

Reviewing your credit early gives us time to identify inaccurate information, recent late payments, high credit-card balances, or other matters that may need attention. Checking your own credit does not hurt your credit scores, according to the Consumer Financial Protection Bureau.

Your consumer credit score may also be different from the score used during the mortgage process. There are different scoring models, so I would not make a homebuying decision based entirely on a score from an app.

It is usually a good idea to avoid opening new credit accounts or making large financed purchases while preparing for a mortgage. A new car payment, credit card, or other debt can change the numbers we are working with.

If there is something on your credit that needs work, I would rather find it two or three months before you start shopping than after you are under contract.

Find out how much cash you may need

The down payment is important, but it is not the only amount to consider.

Depending on the transaction, you may also need money for:

• Closing costs

• An inspection

• An appraisal

• Earnest money or other deposits

• Moving expenses

• Initial repairs or improvements

• Reserves for the unexpected things that come with owning a home

The exact amount will depend on the home, mortgage program, contract, and your financial situation.

Down-payment requirements vary by mortgage program and by the buyer’s situation. I will review the options actually available through Cannon Mortgage and explain how much you may need for the down payment, closing costs, and reserves. Do not assume you need a certain down payment because that is what a friend or family member needed. Your situation may be different.

Get your documents organized

Mortgage financing requires documentation, and gathering it early can make the process easier.

The exact documents depend on how you earn your income and the mortgage option being considered, but they may include:

• Recent pay statements

• Wage and tax statements

• Bank and investment statements

• Federal tax returns

• Documentation for retirement, Social Security, bonus, commission, rental, or other income

• Identification

• Information about current debts and properties

Self-employed buyers and people with income that changes from month to month may need additional documentation. That does not automatically mean the financing cannot work. It simply means we may need more time to understand and document the income correctly.

Do not move money between accounts, make large deposits, or change jobs during the process without talking to your mortgage professional first. Changes that seem ordinary can create questions that need to be documented.

Talk before you begin making offers

A mortgage review or preapproval can help you understand a possible price range before you shop.

It can also help identify:

• The payment associated with different purchase prices

• The approximate money needed at closing

• Documents that still need to be gathered

• Credit, income, or debt concerns

• Mortgage options that may fit the situation

• Questions to discuss with your real estate agent

A preapproval is not a guarantee that a mortgage will close. The property, appraisal, title work, insurance, updated financial information, and final review can all matter.

It is still an important step because it helps you and your real estate agent begin the search with better information.

Remember that the property matters too

Around Lincolnton, Hickory, Statesville, Mooresville, Lake Norman, and the communities north and west of Charlotte, buyers may consider everything from older homes and new construction to rural properties and established neighborhoods.

The type and location of a property can affect taxes, insurance, appraisal requirements, homeowners association costs, and the mortgage options available.

That is another reason I want to know what you are considering before we get too far into the process. Financing a home is not only about the person buying it. The property has to fit too.

Compare the complete mortgage, not just the rate

Interest rates matter, but they do not tell the whole story.

When you have a particular property and request a mortgage, the Loan Estimate provides information about the expected interest rate, monthly payment, closing costs, and other terms. The Consumer Financial Protection Bureau’s Loan Estimate guide can help you understand the form.

When comparing options, look at:

• The interest rate

• The annual percentage rate

• The estimated monthly payment

• Mortgage insurance, when applicable

• Points or lender charges

• Total closing costs

• Estimated cash needed at closing

• Whether the rate is locked

• How long you expect to own the home

I want people to understand the tradeoffs. A mortgage with the lowest advertised rate is not automatically the best fit for every buyer.

If you are not ready today, that is still useful to know

Sometimes we look at everything, and the answer is that a buyer appears ready to move forward.

Sometimes we find one or two things that need attention first.

That could mean building savings, lowering a monthly debt, correcting inaccurate credit information, documenting income, or simply allowing more time. Finding that out early is not a failure. It gives you a plan.

And if you are already in a strong financial position, the early conversation still matters. It gives us time to compare options, talk through the numbers, and make sure the financing supports what you want to do.

This is not only for first-time homebuyers or people who expect a problem. It is for anyone who wants to begin with a clearer picture.

Where should you begin?

Start by thinking about three things:

1. When you would like to begin looking at homes

2. What monthly payment feels comfortable

3. How much money you would like to keep after the purchase

Then let’s talk two or three months before you plan to shop.

You do not need to have every answer before you call. We can work through the questions together and find out what the next step may be.

The first step is knowing where you stand.

Talk with Aaron

Aaron Miller NMLS# 2717963 | Cannon Mortgage Company NMLS# 2528226
Equal Housing Opportunity

This article is for general educational purposes and is not a commitment to lend. Mortgage eligibility, terms, costs, and program availability depend on the borrower, property, program requirements, and applicable underwriting.