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Alt-tag: A person just about to sign a mortgage.
7 First-Time Homebuyers Tips for Securing a Mortgage
Buying your first home can seem like a daunting task. Especially if you need to secure a mortgage in order to do so. The whole process of finding, negotiating for, and buying a house is arduous enough as it is. And if you also have to worry about getting a mortgage, the whole thing might seem impossible. Well, to make this a bit easier on you, we will give you seven first-time homebuyers tips for securing a mortgage. With luck, these should set you on the right path toward homeownership.
First-time homebuyer’s tips for securing a mortgage
Before we go any further, it is important to note that signing a mortgage is a serious commitment. The most common mortgage term in the U.S. is 30 years. This means that you will have regular monthly dues for the next 30 years from the moment you sign your mortgage. That is 360 payments that you have to meet. Otherwise, you stand to lose your home. So, consider your situation and your future carefully before you proceed.
Boost your credit score
Your credit score depends on whether or not you get a mortgage and how good the terms are. If you have a high credit score, the bank will trust that you can actually meet your monthly mortgage payments. Therefore, they will be far more likely to provide a mortgage with decent terms. On the other hand, if your credit score is low, the bank will see you as a bit of a risk. Therefore, if they choose to give you a loan, they will likely give considerably worse terms.
For this reason, one of our first-time homebuyers’ tips for securing a mortgage is to boost your credit score. While there is no way to double or triple your score magically, there are ways to make small yet notable improvements. For instance, you can close down credit score accounts you no longer use. Or you can simply check your credit report for possible errors.
Carefully calculate your budget
Being able to buy a home and being able to afford one isn’t the same thing. Just because you can get a mortgage to cover the buying price doesn’t mean that it alone will be enough. Keep in mind that along with the buying price, you will also have to pay for the following:
- Home Appraisal
- Home inspection
- Property taxes
- Closing costs
- Moving costs
While you can mitigate some of these costs, keeping them in mind before you opt for a mortgage is crucial. For instance, if you have a helpful crew at your disposal, you can even make a long-distance move from NYC to another part of NY state budget-friendly. But even top-notch movers cannot make it free. So, understand the actual cost of buying a home before you get your mortgage.
Save up for the deposit
The bigger the deposit, the better the mortgage. A high deposit will enable you to choose between different mortgages and the one that suits you best. Furthermore, the ones you consider will likely have far better rates than the ones you would get with a low deposit. And you’ll be able to pay them off considerably faster. Therefore, do yourself a favor and enlarge your deposit as much as possible before purchasing. If it is any motivator, know that the sooner you become a homeowner, the sooner you can use your home to build your net worth.
Don’t change jobs
Money lenders always look for stability in the people they lend money to. If someone has a stable job, the lender can rest easy that the person will make their payments. So, if you plan on getting a mortgage, it is best that you don’t change companies. The longer you stay within a company, the more reliable you will see to your lender. And the more trustworthy you seem, the better terms you will get.
If you buy a house because you’ve changed your job and need to be, this doesn’t have to be the case. In fact, Heart Moving Manhattan says this is one of the most common reasons people relocate to different cities. Of course, the context of why you’ve changed your position and how often you’ve done so will play a significant factor. But, a general rule of thumb is that you want to present yourself as a stable, reliable individual.
Reduce debts
Debts are never a good sign. Once a lender considers giving you a long, they will closely examine whether you have outstanding debts. The more you have, the less responsible you will seem with your money. So, the smartest course of action is to lower your debts as much as possible before you opt for a mortgage. Ideally, you will completely pay off your debts and only then apply.
Carefully consider who your sign your mortgage with
It is not uncommon for people to sign a mortgage with someone. A spouse, a family member, a life partner, and so on. These are among the most common choices for co-signing a mortgage. But before taking such a step, acknowledge this is a big commitment. Plans can change, and it is by no means uncommon that people fail to honor their mortgages. So, consider various options carefully and only co-sign with someone with a good credit history. Someone who you know is reliable and responsible.
Consider talking with a local mortgage broker
In our mind, one of the best first-time homebuyers’ tips for securing a mortgage is to talk to a professional. And expected mortgage broker will be able to explain the process to you in all the necessary details. They can also research the market and help you pick the best option available. Just like a realtor can explain the process of buying a house and outline the current real estate trends. So, all in all, at least consider talking to a seasoned professional before you sign a mortgage.
