(Newswire.net — November 11, 2017) — Buying a home is normally a huge deal for every individual. The process can be exciting and draining as well, especially for first-time home buyers who don’t quite know exactly what to expect. However, you can simplify the process by conducting a little research.
This article highlights five important tips to obtaining a mortgage for the first time.
1. Check your credit score
One of the major factors that determine how much loan money you can get is your credit score. This credit score will not only determine what home you can afford but also the interest rate for paying up your loan. So before applying for a mortgage, it is important to calculate your credit score and know your credit report. The credit report will help you determine the type of loan you qualify. It also helps during damage control, allowing you to be eligible for a mortgage in the future.
2. Put your documents in order
When applying for a mortgage, you will be required to provide some documents. They include your income, tax returns, social security card, marriage license (if you are married), personal information, contact numbers and more. It is important to know the required documents so that you can put them in order before seeking a lender for a mortgage. Buying a home can take longer than expected. However, knowing what you need and where to find it will save you time once the process commences.
3. Evaluate assets and liabilities
As a first-time homeowner, you should monitor your monthly cash flow. This will help you to know how you spend your money and how much money is left for savings. It is important to weigh how much money you are getting monthly and how much is owed. In addition, as a first time home buyer, you should be acquainted with the basics of mortgage lending. This includes having an idea of how the lender will view your income. For instance, some professionals (such as independent contractors) may need to show their incomes history of not less than two years before qualifying for a loan.
4. Know your limit
Before the lender can tell you how much you can afford, it is important to calculate how much you can pay for. You also need to know how much down payment you can afford to pay for the mortgage. Next, determine your debt ratio so as to identify your limit. It is required that for a monthly payment of the mortgage, it should not be more than 28% of your pre-tax income and your total debt (including the mortgage) should not be more than 36%.
5. Shop around for mortgage lenders
One of the common mistakes that first time buyers commit is accepting a mortgage before weighing other options first. Do not settle for the first mortgage that comes your way. Instead, consider others with low rates. The difference in rates can appear small but it can save you hundreds of dollars over time. One of the best mortgage lenders is Altrua Financial. They strive to provide their clients with the ultimate mortgage experience by giving the best rates and unbiased mortgage options and guidance for best result.