Top Mortgage Tips for First-Time Home Buyers
Getting a mortgage is a major commitment, no doubt. It’s therefore important that you find the best deal possible if you are a first time home buyer. You’ll need to be in good financial shape in order to get approved and qualify for a good rate. This means that before you arrange for the mortgage, there are several things you should be aware of. Here are some tips that can help you secure the best mortgage possible:
Have a financial plan
Before you apply for the mortgage, it’s vital that you take a bit of time budgeting. To begin with, consider whether you’ll be able to afford paying back the amount you’re borrowing.To begin with consider whether you’re going to afford to pay back the amount you want to borrow. 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. Do you expect to have any problems with the monthly repayments. You’ll need a mortgage calculator to work out the numbers so you can be adequately prepared before approaching a lender.
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Get your credit right
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Your credit score and credit history are among the factors your lender will consider when assessing how much of a risk you are. For this reason, you should take a look at your credit report before applying for the mortgage. The last thing your lender wants to see is credit cards with high balances. So pay off your debts, or at least try to keep your balances to a minimum. 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 shows your lender that you’re capable of managing your finances well, which increases your chances of getting approved.
Consider length of the loan
This is no doubt one of the top considerations. While a 15-year mortgage may be provided at lower interest rates, your monthly payments will be bigger than if the repayment period was stretched to 30 years. Taking a shorter-term mortgage would be a good idea if you can afford the large monthly payments.
Job stability 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. Many lenders only consider those who’ve been in their current jobs for at least three to six months. Keep in mind that one of the things they will require is proof of income. That means getting the relevant documents from your employer. You might also be asked to provide your last three months’ pay slips and bank statements so the lender can have a look at how you’re earning and spending money.