Buying a house is the biggest financial decision made by many.
And the process of homebuying is at times complicated and stressful.As it is such a big commitment financially, you need to do your research well.Before committing to a mortgage payment here are few things that you must consider.As it is such a big commitment financially, you need to do your research well.Before committing to a mortgage payment here are few things that you must consider.GETTING QUALIFIEDBefore you start looking at different properties and real estate, it is advisable to get prequalified.Where you reach out to the bank or a lender to get to know the basic credit process.This will determine whether the bank is willing to give you a loan in the first place.Sometimes it can take months to get approved by banks and lenders.
Getting a prequalification before you go home hunting, will give you a clear idea of how much will you be able to qualify and what should your budget be.PROOF OF INCOMEWhen you are applying for a loan the bank or lender will ask you for proof of your income.So the banks will get an idea of the money you will have at your disposal for the long term.Your income proof will be work or tax forms that indicate a steady income for the past several years.ASSETSWhen you show your assets and wealth like investments in real estate, business ventures, and the stock market then you not only showcase your ability to repay your mortgage but also assets that can be used as collateral, in case of default.YOUR DEBTSThe banks will also want to look at your debt to income ratio because even with a good amount of income and assets, your debt could outweigh those positives, making you a liability for lenders to negotiate.All types of debt, from credit cards, car loans, or school loans will be considered.So if homebuying is your goal try to pay off your debts as early as possible.CREDIT SCOREYour credit score reflects your ability to make your payments on time and your ability to manage your finances.A bank wants to enter a contract with a candidate who is a good financial investment for them.If your credit score is bad, it makes you a much bigger risk for them, and they will not want to offer you a mortgage.TYPES OF MORTGAGEThe main two mortgage types are a fixed-rate mortgage and an adjustable-rate mortgage.In a fixed-rate mortgage, you are charged a specific interest rate that will not change, over the life of the mortgage.With an adjustable-rate mortgage, depending on market interest rates the amount of money you pay will change.A lower fixed-rate mortgage gives you the certainty of knowing exactly how much you will pay over the term of your contract.GOVERNMENT MORTGAGESWith government loans, the credit score demand is not too stringent but they come with higher interest rates and insurance or upfront fees.Government loans provide assistance to people who cannot qualify for traditional loans because of lower incomes or lower credit scores, it is also beneficial for people living in rural areas, or for military veterans.Before you commit to a mortgage, understand your budget and what you can afford.Look at your financial limitations by doing thorough research.
Be comfortable and consider your budget carefully.Reference Source: Washington Independenthttps://www.compareclosing.com/mortgagenews/what-to-consider-before-home-shopping/
