Five Tips to Obtaining a Home Loan
Owning a home is a dream that most people have but it can take a long time to achieve that goal, while costs for residential properties keep going up. In order to make it easier to get approved for a home loan you need to prepare yourself financially when you start saving for a house or condo. Here are five tips for obtaining a mortgage when you’re ready to buy your first home.
Maintain Good Credit
Having issues with credit can make it difficult to obtain a mortgage, so you need to make sure you keep your credit history as clean as possible. When you use your credit card, try to pay off the balance when you get your bill or at least make all of the payments on time. Only have two or three credit cards or lines of credit open because having too many accounts is frowned upon by most lenders.
Clean Up Credit
If you are unsure about your credit rating, do some research by examining your credit history. There are websites that will allow you to see your credit history at no charge, so use one of them to check your score and look for any errors on your credit. If you do spot errors, contact the businesses reporting the issue to clear up any problems and get them to correct the error.
What Can You Afford?
Before you start saving for a down payment on a home, determine how much you can afford to pay each month on a mortgage. If you are currently renting and you don’t have any problems paying the rent, use that as a guideline to what you will be able to pay each month on a mortgage. You can also use a mortgage payment tool, such as a mortgage calculator, to determine how much you can easily afford to pay each month for a home.
When you’re ready to buy a property, shop for a mortgage and compare interest rates to find the best one for your needs. Even though you may have had the same savings account since you were a toddler, your bank may not have a mortgage that fits your needs. Instead, you should look at different lenders to find the best rates and the lowest fees in order to save money on your payments each month.
Closely Examine Fees
When comparing mortgages don’t just look at the interest rates but also look at the fees attached to them. Examine exit fees, fees for paying off a mortgage early, and others that may be added to a mortgage. Some lenders will charge much more for fees than others while you can save money by avoiding paying some fees all together.
You can keep your credit clean by making payments on time and not opening too many lines of credit. If you can maintain a high credit rating, that will help you be approved for a mortgage. Before committing to a lender, shop around to get the best possible deal on a mortgage.