Buying your first home is always a complicated task. There are a bunch of aspects that must be considered, and more often than not, things don’t move as smoothly as expected. This is also because you are dealing with mortgage lenders and bankers, who have their ways of making money. Mortgage, for the uninitiated, is a form of home loan, where the property serves as the collateral. If you don’t pay your installments as per schedule, you may have to deal with the consequences, which include bad credit score, or worse, you may lose your dream home. In this post, we have enlisted a few tips that may come in handy for those handling mortgage for the first time.
- Start with what you can afford. Lenders are essentially worried if you can repay the loan on time. They will check a lot of things, including your source and stability of income. If you are self-employed, the journey ahead can be even harder. Do your overestimate your financial status. Check OnQFinancial – mortgage calculator formula, which offers an insight how much you have to pay each month based on basic inputs.
- Plan un advance. Paying off a few debts and getting your credit score in line may take time, which is why you need to plan in advance. Whether your loan will be approved or not is dependent on several factors, including the ratio between debt to income, which shouldn’t more than a certain percentage (38%). Just keeping a check on dues and settling a few loans can improve your score.
- Check your credit score again. Take a look at your credit report in the last few months and see if there are any aspects or mistakes. While that isn’t very common, but you won’t want something unusual to affect your credit score. Also, try and see what items are affecting your credit score adversely. As mentioned, if you work early, you can get your credit score to the point where you may get preapproved in no time.
- Know the other facts. Ideally, your mortgage payment, including insurance and everything shouldn’t exceed 28% of your monthly salary. It only makes sense that you check and ensure that the entire paperwork is done as expected. Paperwork will be checked time and again, and your lender will want to find if there are any concerns, payments or debits that need attention.
Check online for calculators and understand your financials better.