Why Lenders Aren’t As Bad As You Think

4 Important Mortgage Tips for the First-Time Home Buyer Taking a mortgage is no doubt a major commitment. It’s therefore important that you find the best deal possible if you are a first time home buyer. To get approved and qualify for a decent rate, you will need to be in good shape, financially speaking. This means that you must be aware of certain things before you can arrange for the mortgage. Below are a few tips to help you get the best possible deal: Have a financial plan It’s vital that you take time to budget before you apply for a 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. For the monthly payments, do you anticipate any problems? 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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When trying to assess how much of a risk you are, two of the most important factor your lender will consider are your credit score and credit history. For this reason, you should take a look at your credit report before applying for the mortgage. The last thing the lender wants to see is that you have credit cards with huge balances. So be sure to pay off your debts, or at least have these balances at a minimum. It also helps when you have no outstanding loans, such as when financing a new car. Having your credit in good shape is a sign to the lender that you’re good at managing your finances properly, and this improves your chances of getting approved. Consider length of the loan This is definitely of one of the most important considerations. While you may get a lower interest rate with a 15-year mortgage, the monthly payments will be bigger than having the repayment period stretched over 15 more years. If you can afford the large payments, taking a shorter term loan would be a good idea. Job stability matters It helps if you have a stable job, because most lenders need to see that you have been in a certain job for a good amount of time. So if you’re thinking about changing jobs, you may want to secure the mortgage first before you proceed. Most lenders will only consider applicants who’ve been in their current jobs for a minimum of 3 – 6 months. Remember that one of the things they’ll need is proof of income. That means getting the relevant documents from your employer. You may also need to provide pay slips and bank statements for the last three months, so they can have a look at your earning and spending patterns.