4 Important Mortgage Tips for the First-Time Home Buyer
Arranging a mortgage certainly is a big commitment. It’s therefore important that you find the best deal possible if you are a first time home buyer. 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 are some tips that can help you secure the best mortgage 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. Next, you’ll want to make sure that the amount you’re borrowing will be enough to cover the purchase of the property as well as the associated fees. Do you anticipate any problems with your monthly repayments? Get a mortgage calculator to work out the math, so you’re well prepared before you approach a lender.
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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. Before you apply for the mortgage, therefore, you’ll want to take a look at your credit report. The last thing the lender wants to see is that you have credit cards with huge balances. So pay off your debts, or at least try to keep your balances to a minimum. It also helps when you have no outstanding loans, such as when financing a new car. Having good credit shows your lender that you’re capable of managing your finances well, which increases your chances of getting approved.
This certainly is one of the topmost considerations. While you may get a lower interest rate with a 15-year mortgage, the monthly payments will be bigger than having the repayment period stretched over 15 more years. If you can afford the large payments, taking a shorter term loan would be a good idea.
Job stability is important
Having a stable job helps, as most lenders want to see that you’ve been in a certain job for a bit 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. Remember that proof of income is one of the things they’ll need. This means obtaining 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.