Owning a house is a lifelong dream of many, but one that can quickly come shattering down if we take the wrong steps. Purchasing a home is not an easy undertaking, as you need to find something that fits your budget, ensures safety and security, fits your family’s needs, and offers a good mortgage interest rate.
This is why you need to sit down and assess the situation, while your heart might be set on a big house, but the higher the loan, the higher your interest rate will go. To help you out, we have listed down a few ways you can find the best home loan.
Check Credit Score & Reports
It’s time to take a deep dive into your credit scores and reports and find out even the slightest of issues. Open and dispute and get it resolved before you apply for a home loan. Think of it this way, the higher your credit score, the more reliable candidate you will become.
If your score is less than 760, we suggest you try to improve it as much as possible. Start by paying off your debts, and making every single payment on time. The more time you spend on adding to your score, the less interest rate you will have to pay. Considering it is a long-term process, we suggest you give it your all.
The next aspect you need to focus is on paying a big down payment, while you are only liable to pay a small amount. However, we suggest you put in a huge down payment to bring your loan total down. Once you offer more than the average, you automatically qualify for a lower interest rate. Again, the interest rate is something you will be paying off for years, so the lower your interest rate, the sooner you get out of debt.
Short Term Loan
One of the things worth looking into is short-term loans. For instance, when you take on a 15-year fixed loan, in comparison to a 30-year fixed loan – you will pay a lower interest rate. There are times when there is a huge margin difference, one that can ensure you can keep the payment coming in without compromising your day-to-day life.
Taking up a second job, for the time being, is not a bad idea, especially if you are young and have the time and energy to offer. The more you make now, the less you will have to worry in the years to come. Moreover, you have to keep in mind that you have to pay on a monthly basis, so if you are making $7000 per month, you will be spending about 42.8% of your income on a mortgage payment.
Rather than sticking to one, we suggest you apply to at least three lenders and see which one offers you the best long-term deal. Keep in mind that you will be liable to pay in the years to come, so choose the one that you can easily keep up with. Rather than the one that will have you strapped for most of your life. There is no shame in starting with a small place, and adding to your life when the time is right.