5 Tips For Taking Out Your First Mortgage

 

Nearly all first-time homebuyers must take out a mortgage to buy that first home, and the process can be frustrating.

Applying for a mortgage is no easy task and lenders may reject you, if they decide that you can’t make your mortgage payments on time. There are many variables that a lender will consider, including your income, total outstanding debts, and your repayment history.

Here are a few tips to increase the chances of being accepted for a loan, and tools to improve your overall personal finances.

Why a Budget Is So Important

Every homebuyer needs to have a budget, which allows the purchaser to accumulate a down payment amount, and to have funds available to make the mortgage payment each month.

There are two big costs to consider when taking out a mortgage. The first is the down payment, which the amount you initially pay to secure a mortgage. The second is the monthly repayments.

Some lenders offer mortgages with a down payment of less than 5%, especially for those that are relatively young, but you could be paying a much bigger mortgage payment with lots of added interest as a result. Can you afford a huge monthly mortgage payment?

To avoid this problem, set up a personal budget that allows you to save money for a larger down payment. Making a bigger down payment can save you a lot of money in the long run – waiting until you have a savings balance is tough, but it can pay off in lower mortgage payments.

Victoria, BC residents can find a team of veteran mortgage brokers at Auxilium Mortgage. The group also specializes in investments and insurance. The business has obtained over $680 million in mortgage funding for customers, and they can deliver the best mortgage solution for you.

To save yourself some stress, many banks are implementing what is called a “mortgage stress test” where they can check if you meet certain financial standards. You can find a mortgage stress test calculator online to give yourself a better idea if you qualify for the mortgage you want before you go into the bank. It can be a sobering experience, but it will certainly open your eyes to what sort of mortgage you would qualify for.

Your Credit Score’s Impact

Your credit score dictates how much you can borrow, and the interest rate that you’re charged on the loan.

A low credit score will affect your chances of being accepted for a mortgage loan. Your credit score is your license to spend, and is affected largely by your ability to make payments on time. Your history of missing payments on bills could result in a lower credit score.

At the same time, it’s possible to not have a credit history if you’ve never had to pay bills. Sites like fixmy.credit can help you to explore credit-building options that could improve your score. There are also many sites online that can reveal your score.

Keys To Managing Debt

If you can successfully manage payments on a reasonable amount of debt, you can develop a good credit score. However, carrying too much debt- or not making payments on time- will make it harder for your to borrow money.

Some mortgage lenders may not look upon you fondly if you already have multiple debts to pay off. Carrying multiple personal loans could be an indicator that you live beyond your means and are less likely to make mortgage payments on time. Try to get rid of many debts as you can before applying for a mortgage, which will increase your chances of being approved.

What About Your Job?

It can also help to have a stable job when applying for a mortgage. If you’ve been in the same job for over a year, it indicates a sense of stability. If, on the other hand, you keep job-hopping and your income keeps changing, mortgage lenders may doubt your ability to provide a steady income in order to make payments on time.

Try to get your career settled so that you have better chances of getting accepted by a good lender.

Do You Need An Expert?

As a first time buyer, the world of mortgages can seem complicated – it’s often beneficial to talk to an advisor who can guide you through the process. Sites like mortgageadvicebureau.com can help you to find an advisor. Some advisors may charge a fee, but you may get access to mortgage deals you can’t find on your own.

Use these tips to get approved for your first mortgage.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

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