Factors to Consider When Getting a Mortgage
Unless you intend to pay cash, it is essential that you get mortgage approval before you start shopping for a home. Choosing the right lending institution should be the first step. Compare the different options available to you and determine which one suits your situation the most. Many factors may influence whether or not your home loan gets approved. Some of those factors, which you should put into consideration before you apply for the mortgage, are highlighted below.
Credit Score
Your credit score plays a significant role in determining whether your mortgage application will get approved and if so, the amount that will be approved. The higher your credit score is, the better your chances of approval are. Having a good credit score may also fetch you better interest rates. You should thus consider improving the score before applying. An example of how you can improve your credit score is by paying all the minor debts that you may have.
Your Earnings
In a majority of cases, the lenders require that you have a steady income source as part of the qualifications for the mortgage. The source of income does not matter and can be salary, child support, alimony payment, or stock dividends, among others. Individuals who are self-employed and have irregular income may have a relatively harder time qualifying for a mortgage. For such cases, the individuals should have a significant amount of savings and good credit score.
Down Payment
A majority of lenders may require a down payment, which should be a given percentage of the total amount of home loan that you borrow. The down payment may affect the equity amount that you will have in your home. Putting down a large down payment gives you more equity.
Interest Rates
Different lenders usually charge varying interest rates on their mortgages. You should do some research to find out which lender offers the lowest interest rates. Interest rates often change, so it is essential that you confirm the current rates before you make the final decision. You can get the relevant information from the lender’s websites. Remember also to consider whether the interest rates are fixed or adjustable.
Fees and Closing Costs
The closing process usually comes after a mortgage approval. The process includes various lender fees and costs such as attorney’s fees, loan origination fees, and survey fees, among others. Make sure you check the promotional prices, waived fees, and reduced closing prices as you apply for the mortgage.
Unless you intend to pay cash, it is essential that you get mortgage approval before you start shopping for a home. Choosing the right lending institution should be the first step. Compare the different options available to you and determine which one suits your situation the most. Many factors may influence whether or not your…
