Lessons Learned from Years with Mortgages

Best Mortgage Tips for the First-Time Homebuyer

Getting a mortgage is a major commitment, no doubt. If you’re a first-time home buyer, therefore, it’s important that you find the best deal available. 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. Below are a few tips to help you get the best possible deal:

Plan your finances

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. Do you anticipate any problems with your monthly repayments? What you’ll need is a mortgage calculator to work out the math, so that you’re adequately prepared before going to see a lender.
Getting Down To Basics with Lenders

Get your credit right
Getting Down To Basics with Lenders

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. For this reason, you should take a look at your credit report before applying for the mortgage. Credit cards with high balances is the last thing your lender will want to see. 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.

Loan term

This certainly is one of the topmost 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 loan would make sense if you can afford the large payments.

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 about changing jobs, you may want to secure the mortgage first before you proceed. Many mortgage lenders only consider applicants who have been in their current jobs for at least 3 – 6 months. Keep in mind that one of the things they will require is proof of income. 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.

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