Are you a first-time home buyer? Buying a home as a first-time home buyer is exciting and can end up being the biggest purchase of your life. Therefore, it’s important to be prepared before you apply for a mortgage. There are a couple of things you need to know before applying for your mortgage to help your mortgage process go more smoothly.
Here are 4 things you need to know before applying for a mortgage:
1. Know your credit score
You should know your credit score before you start looking at houses and before you apply for a mortgage. Your credit score is one of the biggest factors in determining whether or not your mortgage application will be approved and what rate you’ll end up with. So, the better your credit score is, the less interest you’ll pay on your mortgage.
2. Know how much you can afford
You should know how much you can afford to pay towards your monthly mortgage payment. You should also take into consideration that your monthly housing expenses include closing fees, property taxes, home insurance, utilities and maintenance bills. It’s important to estimate how much you can afford beyond principal and interest payment so you know exactly how much you need for your home. Consider looking into debt consolidation too, which will allow you to save money by reducing your high interest payments on credit cards.
3. Know what type of mortgage you want
You should know what type of mortgage you want. There are two types of mortgages: a fixed rate and variable rate mortgage. A fixed rate mortgage is for young couples who are looking for stability in their monthly payments or manage a tight monthly budget. A variable rate mortgage allows borrowers to take advantage of lower rates as the interest rate is calculated on an ongoing basis at a lenders’ prime rate minus or plus a set percentage.
4. Know who will offer the best deal
You should know who will offer the best deal before signing a formal mortgage application. You need to find out about closing costs and other fees so you can compare it from different lenders based on the type of loan you’re looking to get. So, it’s a good idea to shop around to help you get the best deal on your mortgage loan before you sign that mortgage application along the dotted line.