What you should know - for first time buyers
For a lot of first time buyers, getting a mortgage can turn into a baptism by fire. Often, you don’t know how complicated the process is until you’re in the thick of it.
The better you understand how the industry works, the better the position you’ll be in to get a good deal. Here’s what you need to know.
Preparation is Key
A strong credit score is one of the best ways to make sure you get the best rate from a lender. That’s why homebuyers should ideally take a look at their credit report from a major reporting bureau such as Experian or Equifax – well before they start house-hunting.
Pre-Approvals Create Stronger Offers
Before you start searching for a house or unit, we recommend getting a pre-approval from a lender. The lender will evaluate your income, credit score and other factors to determine how much you can borrow.
Having the loan amount in hand prevents you from wasting your time looking at properties you can’t afford. And when you find a property you really love, a pre-approval letter can also make your offer more compelling to the seller.
It Pays to use a Broker
A home is likely the biggest purchase you’ve ever made, so even a small difference in interest rates can make a huge difference in the long run. Using a mortgage broker will enable you to find the best loan and save you time and effort.
A lot of people like to research using loan comparison websites, you shouldn’t get over-excited about low advertised rates that you see online. Instead, you should talk us and we will give you a rate based on your credit score, income and debt level. It’s important you work with quotes that are specific to your situation.
Rates Aren’t Everything
Who doesn’t like to brag when they get a killer interest rate on their loan? But sometimes it comes at the expense of higher loan fees.
Sometimes Less is More
A pre-approval shows how much credit the lender is willing to offer you. But that doesn’t mean it’s a good idea to spend that entire amount on your new mortgage. You may want to leave a larger cushion for expected (and unexpected) costs, especially with children in the picture. Over time, the cost of other things, like health insurance, food and tuition, is almost certain to rise. So having some additional money for savings and investments certainly won’t hurt.
You Can Refinance Your Loan
Perhaps you didn’t make the best mortgage decision the first time around. Don’t fret. As long as you maintain good credit, have steady employment and practice other healthy financial habits and have gone beyond the 18m to two-year mark, you shouldn’t have trouble refinancing. Just make sure you’ll be in your home long enough to justify the closing costs you’ll have to pay when you take out a new loan.
Banks Don’t Like to take Possession
Life can sometimes bring unexpected financial strain, whether it’s a job loss or a sudden medical crisis. But don’t think you’ll necessarily lose your house if you’re unable to make your full mortgage payment. Banks stand to lose a lot of money if they have to resell the house, so they’re usually willing to work with you on a solution. The best thing to do is be completely upfront about your situation with the lender and get the names of people you talk to along the way to work out a solution you can both agree on.
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