As soon as I realized that my personal financial picture was a little bleak, I started thinking about taking out a personal loan. I wasn't really looking forward to going into debt, but I knew that if I wanted to solve a few short-term problems, a loan would be the way to go. I talked with a few of my local financial institutions to get a good idea of what they could offer me, and then I sat down to go over the paperwork. It was incredible to see how much money I could save by securing a lower interest rate. Check out my blog for more information about loans.
Buying a home is a major financial decision. In most cases, your mortgage will be one of your biggest expenses. It's also something that you will likely be paying off for years to come. The process of buying your first home can also seem overwhelming at times. You want to make sure that you find a home that suits your needs and your budget. The process of getting approval for your first home loan can also be stressful. Here are three things to know about getting your first mortgage.
Your Credit Score Is Important
The first thing that you should be aware of when looking into a mortgage is that your credit score is important. The better your credit score and overall financial health, the more likely you will be approved for a home loan at a favorable interest rate. Your credit score can also have an impact on the type of loan you qualify for. Most conventional loans require a credit score of 620 or higher. If your score is lower, you may want to consider an FHA loan or a VA loan. Taking steps to improve your credit score, such as paying down credit card debt and fixing errors on your credit report, may also help you qualify for a loan.
Affordability is Key
When you are looking into your first home loan, it can be difficult to determine how much you can afford. A good rule of thumb is that your mortgage payment including your taxes and insurance costs should not exceed more than 28 percent of your total take-home income. If you have a large amount of other debts, you may need to adjust this percentage to be lower. Your debt-to-income-ratio, which is the ratio of all of your debts to your take home-income, is also something that lenders consider. If this ratio is over 43 percent, you may have trouble qualifying for a home loan.
A Down Payment Can Help
Another thing that you should know when obtaining your first mortgage is that a down payment can be helpful. Putting 20 percent down as a down payment is not a necessity for getting a mortgage. In fact, it's now possible to obtain loans with little to no down payment. However, putting 20 percent down can make you more attractive to lenders and also lets you avoid paying private mortgage insurance. Not having to pay private mortgage insurance can lead to significant savings.
Buying your first home is not something that you want to take lightly. It's a major investment. When getting your first home loan it's important to check your credit score since it will have a major impact on your ability to get a loan and the interest rate on that loan. Affordability is also key. You don't want to take out a loan that you are unable to afford. A down payment can also be helpful when getting your first mortgage.Share
26 June 2018