So you’ve decided to give yourself a new start, and now you’re looking for a home loan provider. You are in the process of choosing the best location, which you can call your new home.
A home loan or mortgage in great locations, such as Salt Lake City in Utah, could help you get a place where you can start anew. But first, you need to learn as much as possible about this financing solution.
What is a mortgage?
Buying your first home is a major decision. It will tie you down. If that is your intention, that’s a good sign. But like most people, you would need to secure a loan.
Simply put, a mortgage is a loan from a bank or another type of lending company that finances a borrower in buying a house. This loan, in turn, is paid off over a course of 15 to 30 years, depending on the terms agreed upon. This loan is secured by the property itself, so if the borrower is unable to pay the loan, the bank or financial institution can repossess the home to be resold.
So what now?
It’s not as easy as going to the bank and asking for money. Instead, financing companies have put measures in place to determine a borrower’s eligibility for a mortgage. These include the following:
Credit Score. Secure a copy of your credit report. Here, you will see what the banks and other lending companies will see when they look at your application. If your credit rating is less than ideal, don’t fret. There are things you can do to improve it, such as getting rid of credit cards that you no longer use. Being on the electoral roll also gives you a boost.
Budget. You need to know what you can afford to pay on a monthly basis in order to determine how much you need to borrow. Go online and look for mortgage calculators.
Job Stability. Another factor that will determine your success in getting that loan is your length of stay in your job. Ideally, you should have at least six months in your current job before applying for a loan.
Credit Card Debts Raise the Red Flag. If you have many debts spread over about five credit card companies, try to pay off the majority of them. Lenders will not be too happy seeing how you’re mismanaging funds and will be less likely to lend you money.
Bank Account. You may not have the money to buy a home outright, but it’s best to have a bank account with more than a couple of hundred dollars in it. Lenders will gauge your money-skills based on the amount you have, so the bigger the savings, the better your chances of being approved.
Buying with Someone Else. If your credit history is not as stellar or if your bank account is found lacking, you may buy with someone else. Just make sure you work out all the details of this ‘partnership’, as this is a long term commitment.
It’s not as difficult as it may seem at first glance, but securing a mortgage is a tricky business. It’s best to go to a professional mortgage company to ensure that you are getting the right mortgage deal.