Barbara Corcoran's 3 Best Mortgage Tips

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Here are some must-follow mortgage tips from a woman who's made a fortune in real estate.

Barbara Corcoran may be a savvy investor across the board, but if there's one thing she really knows, it's real estate. As the founder of the highly successful Corcoran Group, a real estate brokerage, Corcoran has a wealth of knowledge when it comes to getting a mortgage and buying a home. Here are a few tips she has to share, courtesy of CNBC.

1. Know what you can afford to spend

When you're buying a home, the last thing you want to do is take on too much house. Doing so could land you in an uncomfortable financial position, not to mention put you at risk of losing your home.

Most financial experts advise that your housing costs should not exceed 30% of your take-home pay. And by "housing costs," we're not just talking about a mortgage payment. Rather, that figure should include homeownership expenses you're likely to be on the hook for. This could be:

Corcoran says you can follow the 30% rule in the course of your home search. But another thing she suggests is limiting the amount you spend on a home to four times your salary. That, she insists, is generally what you'll qualify for in terms of a mortgage. However, that formula also assumes you'll be making a 20% down payment on your home. Some mortgage lenders will accept less money down at closing.

If you really want to approach your home search with confidence, use a mortgage calculator to see what your monthly payments might be based on different home purchase amounts. That, combined with Corcoran's advice, should put you on a good path.

2. Choose your neighborhood strategically

A home can be more than just a place to live. It can also be an investment. Corcoran says that if you buy a home in an up-and-coming area, you could potentially snag a much lower price than what you'd pay in a more established neighborhood. That means you might lower your mortgage costs substantially, all the while setting yourself up to profit big time once your neighborhood becomes more mainstream and property values there skyrocket.

3. Get pre-approved for a mortgage

Getting pre-approved for a mortgage can give you a solid edge in any real estate market. When you walk in with a pre-approval letter, it shows sellers that you're a serious buyer with the means of affording the properties they want to unload. And in situations where you wind up in a bidding war against other buyers, that pre-approval could really work to your benefit.

Another plus is that once you're pre-approved for a mortgage, you'll see exactly how much you're qualified to borrow. That could, in turn, help you narrow down your home search.

While you may know Barbara Corcoran as a shrewd Shark Tank investor, it's real estate where she's really made her fortune. Whether you're a first-time home buyer or a seasoned one, it pays to keep these tips in mind, as they could lead you to make some very wise choices.

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