With so many residential mortgage options on the market today, buying a home has become very easy. A lot of people would rather buy a house than rent one. But you need to know everything there is to know about home mortgages before you sign any deal.
Five things to do for a home mortgage: 1. Try to pay all your loans and debts on time. Every 30-, 60-, or 90-day loan or credit payment that is late will lower the credit score that the lender looks at as part of the loan file. In turn, the score will determine what kind of home loan you can get.
-If you have to miss something, miss the credit card payment first, then the instalment loan payment, and lastly the payment on your current mortgage. Before deciding what kind of score to give, credit scoring systems look at how similar loans have done in the past.
-Try to pay off all of your debts and put down less money when you close. This leaves the borrower with bigger mortgages, but it also lets them replace high-interest debt that they can't deduct from their taxes with lower-interest mortgage debt that they can deduct from their taxes.
-If you're going to have to pay for more than one thing in the near future, get the mortgage first. Some credit checks, like new credit card applications, can hurt a borrower's credit score, especially if they are done in the months before the home loan is reviewed.
-Save as much as you can to increase the size of the down payment on your home mortgage. Investing savings in something risky, like individual stocks, is almost always a bad idea. It's also a good idea to look at money market accounts or other accounts that offer reasonable rates of return, automatic payroll deductions, or other ways to save money.
Five things you shouldn't do with a home mortgage:
If you just got a home mortgage, you should avoid making any big purchases for the next couple of months. This could mean that there is less money for the down payment, which could lead to another loan.
-If you can't afford it, don't buy a house that costs a lot. If you start with a small monthly mortgage payment and then move to a big one, you won't be able to pay off the loan with the money you have.
-Don't try to get pre-qualified for a home loan. Instead, get pre-approved. Before you can get pre-approved, you must also let the lender pull your credit report, check your debt-to-income ratio, and take other steps in the underwriting process. This could help you get a loan faster.
-When getting a home mortgage, don't forget about how you feel about money. If you can, choose the loan with the shorter term and higher payment. This will help you save money and build equity faster.
-Don't forget the stress that comes with being a homeowner. If you don't pay your mortgage, you might have to pay a lot more than if you don't pay your rent on time. If you have too many bad things on your credit report, your interest rates will go up more than you can handle.
