It’s exciting to buy your first home. It’s a rite of passage that tells the world you’re all grown up. It can also be overwhelming. How do you know that you’re ready? How do you get a mortgage? In this post, we’re giving you a head start.
We’ll give you advice on how to know if this is the right step. We’ll also provide a quick guide on how to apply for home loans. If you get a mortgage the right way, you can save a lot of money.
The process differs slightly depending on which company you apply with, but the steps are similar for all of them.
Are you excited to get started? We are, so let’s go.
Buying a House
Before you start looking, get the following in order.
Are Your Finances in Good Shape?
How much can you honestly afford to pay every month? Remember that the home loan is just one expense. You’ll also have to pay property taxes and maintenance costs. If your interest rate is market-related, would you be able to cope with an increase?
Real estate is generally a sound investment as long as you can afford the associated costs.
What is a Home Loan?
Home finance is a secured form of lending. You repay it over 25 to 30 years. If you miss payments, the lender is entitled to repossess your property and sell it to reduce the debt.
Without this form of financing, very few people would be able to afford their own homes. If well-managed, a mortgage is “good” debt. You’re using it to buy an asset that is likely to grow in value.
The interest rate is a lot lower than it is on other forms of credit because the loan is secured, and you pay it back over such a long period.
How To Avail Home Loans
Make Sure that the Offer is Precisely Worded
You’ve found the perfect home, and you’re ready to sign the offer. Now what? First of all, make sure that the offer is contingent on a successful mortgage application. If you require 100 percent financing, state that the offer is contingent on 100 percent financing.
Speak to a Mortgage Broker
Speaking to a mortgage broker, not just a banker, can be beneficial because they’ll shop around for the best rates. They work with a range of financiers, so you’ll get a variety of quotes.
Go to the Lenders Directly
If you have a good record with your bank, it pays to start there. Ask them for a pre-approval letter so that you know how much you qualify for. It makes the process simpler.
Check Comparison Sites
Comparing can be useful in that it gives you information such as the rates charged and requirements for the application.
Find Out What the Requirements Are
What supporting documents do you need to attach to your application? Find out from the lender you decide to go with.
Get Your Documents Together
Now get your documents together to make your application. Most companies request:
- Proof of income like your latest payslip
- A copy of the offer
- Proof of your identity
- In some cases, three months’ worth of bank statements
Make sure that your dream home doesn’t turn into a nightmare. Do an honest appraisal of where you stand financially. How much can you afford to pay right now? Work on your current income and expenses instead of projected figures.
If your credit score is lower, it’s usually better to wait before applying for a loan. Give it six months. In the interim, pay your bills on time and pay down some of your debt to raise your credit score and give you time to save a bigger deposit.
Once you’re ready to apply, consider getting a pre-endorsement letter from your loan specialist. The letter tells you how much you can buy. It also pegs you as a serious buyer. After that, it’s just a matter of applying.
Good luck and happy house hunting. Visit FinanceCorp to get more help.