Buying a home is an exciting ordeal for most people. However, with the prices of properties sky high, you may have not entertained the idea of buying a house with cash, and have to look for a mortgage like most people do. It can be a daunting task, but with some reading, it is not as complicated as you might initially think. If you are considering a mobile home, you can get the best loan on the market from Manufactured Home Loan.
From choosing the right lender to the best ways to improve credit score, here are five important tips to help you on your way.
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1. Choose the Right Lender for You
Purchasing a home is a big investment, so you need to ensure you choose the right mortgage provider.
You not only need to find a lender that offers good terms. You also need to look for a lender that can help you journey through the home purchasing process.
Your mortgage company needs to be the right personal fit as well as the right financial fit. Traditional banks and lenders have made it hard to achieve this, but modern financing solutions like the home loans from SoFi have made it possible for consumers to get loans more tailored to their financial circumstances and goals.
2. Determine How Much You Want to Borrow
When getting a mortgage for the first time, your lender can work with you to help you determine how much you can afford to pay for your home.
You may be surprised that you qualify for more than you think. If the lender you go with says you qualify for $10,000 over the amount you were considering, for instance, obviously that enables you to purchase a home at a higher price.
However, just because you can afford a larger home, it doesn’t necessarily mean a larger mortgage amount is the right option for you.
Always carefully consider how much you’re willing to spend on your mortgage and don’t be blinded by attractive offers if it doesn’t make financial sense for your circumstances.
To determine how much you should spend on your first mortgage, it’s a good idea to follow the 50/20/30 rule, which involves allocating 50% of your income to recurring payments, 30% on flexible spending, and 20% on savings.
Once you work out what proportion of your income you can afford to spend on your mortgage, you can work out what the best option is for you.
3. Stop Spending During the Process of Obtaining a Mortgage
Because your credit score, income, and other financial factors play a part in how much a mortgage provider is willing to lend you, it’s a good idea to stop spending money on anything unnecessary during the process of obtaining your mortgage.
So, during the process, don’t take out new lines of credit and don’t let your credit card balance grow. Furthermore, it’s best practice to save any large purchases you want to make until after closing day.
Your mortgage lender will calculate your debt-to-income ratio during the pre-qualification process, so you should keep an eye on that number right up until the closing day.
You don’t want to suddenly discover at the last moment that your debt-to-income is over the limit. If it is, you may no longer be able to complete the purchase of your home.
4. Work Towards Improving Your Credit Score
The better your credit score is, the higher the amount you may be able to borrow from your mortgage lender, so look at ways of improving your credit rating.
Pay your bills on time, reduce your debt, and increase your savings, and your credit score is sure to go up.
In the U.S., you can obtain a free credit report. Just take a look at the information on the Consumer Financial Protection Bureau’s website.
5. Take Your Time
Lastly, once you have found the right lender and qualified for your first mortgage, take your time in finding the right property for you.
You don’t have to rush into things, and seeing as you’re making a long-term big investment, you need to ensure the mortgage and the home you pick are exactly what you want. After all, for most people, a home is the biggest investment they’ll make, and you don’t want to commit to a 30-year loan for a home you aren’t happy with!
