Tips for Getting a Mortgage When You’re Looking to Purchase a Home
Taking a mortgage is probably the biggest financial pledge you will ever make. Therefore, it is important to ensure you secure the best deal on the market. Setting yourself up for a comfortable and smooth trip on the mortgaging journey doesn’t happen by accident. There are big decisions to make, and you have to take time and understand the mortgaging process if you want to improve your chances of getting your loan application accepted. Here are four important tips that will help you secure a mortgage when buying a house.
Know your budget
Budgeting is important when purchasing a home. Document your monthly income, debts, estimated cost of living and the amount you have for a down payment. Some lenders will require that you provide at least two weeks of paycheck stubs, so it’s advisable to hold onto them or know how to get them electronically. If you are self-employed, you may have to produce copies of your past one or two tax returns. When budgeting, be realistic and find out what you can afford and what you cannot. Your mortgage payments should never exceed 42% of your monthly income.
Clean up your credit
A good credit score allows you access to mortgages more easily. How? Lenders use your credit report to have a clear picture of your income levels, payment history, and length of credit history. If you have a good credit score, this means that you will do well in the future and most lenders will gladly process your mortgage faster. Before you apply for a mortgage, make sure you check your credit score. This will give you time to improve it if it isn’t very good.
Unlike in the past, you can now obtain a mortgage through several home-financing options on the home loan market. With a myriad of choices to choose from, it’s easy for you to get confused on which mortgage option matches your needs. Ensure you understand the terms of each option, then go for the option that best complements your budget. You can also ask for advice from experts to ensure you choose the right mortgage.
Find the right lender
Just like you want to buy a house that matches your needs and ambitions, you will want to find a lender that meets your expectations. You’ll have to choose between brokers and banks. It’s advisable to go for brokers because they work with a variety of lenders and have the experience needed to navigate the home loan market.
Choosing a lender is all about your financial strength and preference. Ensure you compare at least four lenders to guarantee you find the right one. If you observe these tips, you are less likely to go wrong.