Top Mortgage Tips for First-Time Home Buyers
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 there are a number of things you must be aware of before arranging the mortgage. Below are a few tips to help you get the best possible deal:
Have a financial plan
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 expect to have any problems with the 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.
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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. Before you apply for the mortgage, therefore, you’ll want to take a look at your credit report. 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.
Length of loan
This is no doubt one of the top 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 mortgage would be a good idea if you can afford the large monthly payments.
Having a stable job matters
Since most lenders need to see that you’ve been in a certain job for some time, having a stable job helps. So if you’re thinking of switching jobs, you’ll want to secure the mortgage first before you go ahead. Many lenders only consider those who’ve been in their current jobs for at least three to six months. Keep in mind that one of the things they will require is proof of income. That means getting 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.