Buying a home for the first time can be a daunting process, especially in today’s market where housing inventory is limited and the value of a home is high.
If you are looking for a new home – and mortgage to finance it – it is important to know how to position yourself as a strong candidate for borrowed funds. It’s also important to buy a home that works for you financially. Here are some tips from Emanuel Santa Donato, Vice President of Capital Markets and Lead Acquisition at It is betterto help you navigate your first home search and mortgage application.
1. Set a budget and stick to it.
Buying a home that is too expensive can result in huge mortgage payments that you might find it difficult to handle. This is why it’s important to set a budget before searching.
As Santa Donato explains: “At the end of the day, you’re the only one left to pay the bills, so you want to make sure you set yourself up for success. Many homeowners tend to spend in excess of their budget, which only leads to later headaches. “
To guide your search, Santa Donato recommends figuring out how much you can afford to spend everything your home ownership costs, including:
- Property tax
- Homeowners insurance
you can use mortgage calculator to see what your principal and interest payments will look like based on the loan amount, down payment, and interest rate, and then factor in those other numbers to determine your specific budget.
2. Improve your credit score.
Mortgage lenders love It is better tend to give preference to candidates with a strong reputation. After all, your credit rating tells you how trustworthy you are, and lenders tend to reward strong borrowers with low incomes. interest rates on their mortgage loans.
One of the best ways to improve your credit score is to pay all incoming bills on time. Also, remember to check your credit report for errors and correct any mistakes that could cause the lender to deny you a loan or charge you a higher interest rate than you want. If, for example, you have arrears on your credit report that you have never accumulated, this is something you need to deal with immediately.
3. Pay off existing debt.
Although lenders take credit ratings into account when approving mortgage applicants, they also focus on existing debt. That’s where yours is debt-to-income ratio This ratio measures your existing debt in relation to your income, and the higher it is, the more dangerous signal it serves. On the other hand, debt repayment can help lower this ratio to more favorable terms and give the lender more confidence in your ability to handle home loan payments.
4. Get a pre-approved mortgage.
In today’s housing market obtaining pre-approval for a mortgage especially important because it gives sellers a signal that you are a serious buyer who has the opportunity to pursue your offer. In fact, if you are fighting a competing buyer for the same home and only have prior approval, this gives you a serious advantage.
Pre-approval for a mortgage can also help you narrow your search. As Santa Donato explains: “While your budget will help you understand how much house can you afford“Pre-approval gives you a solid starting point and the ability to compete more flexibly in this hot housing market.”
It’s not easy to be first home buyerespecially in a real estate market like today. But if you follow these tips, you will have a better chance of not only finding a suitable home, but also affordable mortgage agree with this.