Given that interest rates are currently at their lowest level in three years, it is clear that the cost of housing is increasing. This is a great time to buy a home, especially for first-time buyers. However, buying a home is not an easy task; it must be handled very carefully and you must be prepared before use. Here are some important tips to help you move in the right direction.
1. Get your credit report
Check your credit report first. Then find a mortgage lender who will lend to people with your accounts. Before filling out the paperwork for a mortgage loan, you can look at your credit card. Having an unfavorable loan can not only limit the amount that a lender is willing to lend you, but it can also cause you to pay a much higher interest rate compared to someone with average or excellent credit. If you have serious debts in your credit file (such as outstanding loans, bankruptcy, or a large amount of debt), it could prevent you from even getting a mortgage.
Note: You can check your credit score for free and read your credit report within minutes joining MoneyTips…
2. Check your finances before applying.
You will need this information when applying for a mortgage. At the same time, you need to know how much you can afford to borrow and return on a monthly basis. Don’t assume that the lender will only give you what you can afford to repay. Depending on your credit score and some other key information, they may provide you with more than you can afford to pay on a monthly basis. As such, it’s important to make sure you know you can return and don’t charge a cent more.
Note: Consider current and projected income when calculating your finances. Also, remember to count any income you receive from sources other than work, such as royalties or alimony.
3. Looking for a mortgage
When looking for a mortgage, the goal is not simply to compare companies based on the amount they will give you.
There are several factors you should consider, including:
- Repayment terms
- Fixed rate terms
- Loan cost
- Broker commission
- Prepayment penalties
- Application fees and credit report
- Required deposit amount
You should also determine if you want to go to a broker or a direct lender. A broker is an intermediary who negotiates the deal that is most beneficial to you, using lenders from whom he has to choose. The direct lender has the means to provide you with the loan and makes the final decision on your loan.
4. Applying for a mortgage loan.
Before submitting your application, you should know what information you will need to complete your application.
The following is required:
- Checking employment
- Payment receipts (or bank statements indicating electronic payments)
- Bank statements (at least for the last six months)
- Proof of additional income
- Proof of assets
- Obligation Information (the app may ask you about obligations such as loans, car payments, credit card debt, and other expenses)
After completing the application, they will conduct a credit check and determine your eligibility. During this time, you may be asked to provide additional information such as lease agreements, investment income statements, tax return, or divorce decrees.
If your proposal is approved, an appraiser will be hired to check the value of the home to make sure the loan amount is correct.
MoneyTips will be happy to help you get free mortgage quotes from leading lenders.