Best Mortgage Tips for the First-Time Homebuyer
Arranging a mortgage certainly is a big commitment. If you’re a first-time home buyer, therefore, it’s important that you find the best deal available. In order to get approval and qualify for a good rate, you’ll need to be in great financial shape. This means that before you arrange for the mortgage, there are several things you should be aware of. Here’s a look at a few tips that should help you secure the best deal possible.
It’s important to take a bit of time to plan your finances before applying for the mortgage. First off, consider whether you can afford to pay back the amount you’re borrowing. Secondly, you’ll need to make sure that the money you’re borrowing will be enough to buy the property, with some more left to take care of associated fees. For the monthly payments, do you anticipate any problems? Get a mortgage calculator to work out the math, so you’re well prepared before you approach a lender.
The Essentials of Mortgages – The Basics
Clean up your credit
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Two of the biggest factors your lender will consider when determining how much of a risk you are are your credit history and credit score. Before you apply for the mortgage, therefore, you’ll want to take a look at your credit report. The last thing your lender wants to see is credit cards with high balances. So make sure you’ve paid of your debts, or at least tried to keep the balances low. It’s also helps if you don’t have any outstanding loans, such as financing a new car, at the time of your application. Having good credit is a demonstration to the lender of your ability to manage your finances well, and that increases your chances of getting approval.
Length of loan
This is definitely of one of the most important considerations. While a 15-year loan may come at a lower interest rate, the monthly payments will be higher than if the repayment period was stretched over another 15 years. If you can afford the large payments, taking a shorter term loan would be a good idea.
Having a stable job matters
It helps if you have a stable job, because most lenders need to see that you have been in a certain job for a good amount of time. So if you’re thinking of switching jobs, you’ll want to secure the mortgage first before you go ahead. Most lenders will only consider applicants who’ve been in their current jobs for a minimum of 3 – 6 months. Keep in mind that one of the things they will require is proof of income. That means obtaining the necessary documents from your employer. You may also need to provide pay slips and bank statements for the last three months, so they can have a look at your earning and spending patterns.