The Dos and Donts of Getting a Mortgage
Everyone can buy a house with their choice. As long as one is capable of purchasing one, nothing can stop them. But the sad part is it’s not easy to buy one. Patience and restraint are needed, as well as careful planning to get there.
You need to pay your bills and start saving. Your credit history can create a big impact in every application you will come in. Saving is also an important factor that people should have. If a person has a disciplined savings pattern, he can be a good homeowner. People come in a real estate market with different expectations and perspectives, however, it makes it difficult for a foolproof advice although there are emerging online mortgage application, new loan products, and rising interest. But when getting money to buy a home, some general rules apply to everybody.
Do’s:
Make loan and other payments on time, especially over the months going to the filling of your mortgage application.
If something must be neglected, it’s your credit card first. It will give more weight to the performance of mortgage. If you have to prioritize to pay something, prioritize your mortgage loans, your installment loans, and revolving loans.
Pay more debt and put a small amount at closing. Non tax-deductible, high-interest rate debt with lower-rate mortgage debt that features deductible interest will replace the large mortgage from the borrowers. This trend in the market is considered as refinance transaction or purchase transaction.
If there are multiple financial obligations that may arise in the future, prioritize the mortgage. Numerous credit inquiries like credit card applications can bruise a borrower’s credit score.
Pay more of your down payment as much as possible. If you have extra savings, include them in your down payment. Don’t put the savings into something volatile such as individual stock, but rather evaluate the money market that offers reasonable rates of return, automatic payroll deduction, or other incentives to save.
Don’ts:
Do not make big purchases for the next couple of months. It does not only lessen your money available for the down payment, it may require you to get another loan. As a rule of thumb, you do not want your loan to be more than 50% of your gross monthly income.
Do not spend something that cannot fit in your budget. There’a a “payment shock” when lenders approve loans. It is somebody “who goes from a relatively small monthly housing payment to a huge one either won’t qualify for a mortgage or will end up having to cover too much loan with too little money”. Make sure you are happy with your debt loans.
Get pre-approved for a loan, aside from pre-qualified. This can put you closer to obtain the loan and locking in a rate and term.
Don’t forget what you really want to do with the money when you got a mortgage. Once the money is in your hands, you cannot avoid temptations around the corner. Your goal of a short term will probably go to a long term if you consistently spend your extra cash on dinner or watch movies.
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