Let’s face it mortgages are daunting; with interest rates, terms, and credit scores. Many things can make finding a mortgage a challenge but what are the most important things you need to know before taking out a mortgage? Well, you’re in luck, these are three main takeaways that you should know before taking out a mortgage.
- SAVE SAVE SAVE
When preparing yourself to take out a mortgage, being financially secure is extremely important. You will want to have enough to make sure you have enough for a good down payment. This isn’t the only reason you want to be saving though. You will also want to have enough in your account for any unexpected expenses that may pop up due to things such as closing costs, and inspections. Liquidity (cash) is just as important as saving for a down payment. Banks and other financial lending institutions look at the balance of your accounts prior to approval to validate your ability to afford your desired home.
Along with saving, you will want to keep your account in order. Avoid overdrafts, late payments, and your debt. Each of these things can be red flags when looking to approve you for a mortgage. Paying down your debt is also a good start for being able to save. This also takes us into our next point which is credit.
When preparing to take out a mortgage, you will want to make sure that you build your credit. The higher your credit the better deal you will be able to get on your mortgage. This can tie into saving because of your debt. In order to save more, it is a good idea to pay down your debt. In doing this, you are able to build your credit by making the payments on time. Lower your debt can also raise your credit score because you are lowering your credit utilization.
- Do your research
There are so many companies that you can apply with, but you need to make sure to research the companies. Get different quotes, prices, and look at all of your options. Talking to a mortgage broker is a great place to start, especially if you are a first-time buyer because they can break things down for you to have a better understanding of what you are going to be getting yourself into. They are also experts in this field and will be able to answer any questions you may have.
As I stated above, these are only three important things that you must do before applying for a mortgage. Applying for a mortgage and buying a home is a substantial step in life and ultimately the most important thing is to be prepared. These are a few of the steps to help you to prepare for this time in your life.
This article was written by Nicole, an intern at Irish Mortgage Brokers and Yes.ie from the USA