24 Aug How to Prepare to Finance a Home
10 Tips To Start Home Financing Right
1. Keep Your Job
You won’t need to stay in your current company for far too long to be able to take out a home loan. Just don’t make it seem you skip out every two years to prevent paying a higher interest.
2. Check Your Mortgage Options
Your best bet would be homes within the range of two or three times your gross annual income. Seek out help from a finance expert to see what type of loans you are qualified for. Make sure to gather the necessary documentation such as 2 to 4 month’s worth of bank statements, pay stub copies, etc. and don’t leave out other fees such as association, utility, maintenance, insurance fees and property taxes when computing the final figure.
3. Start Saving
You should have enough to cover a down payment and to qualify for a mortgage. 20% of total purchase cost is the ideal downpayment. Don’t forget closing costs, which can be somewhere around 2 to 7 percent of the total home price.
4. Look for Downpayment Options
As your mortgage broker to discuss downpayment plans offered by the government like the 1st Time Home Buyers Plan.
5. Get A Credit Report Copy
Get a current credit report and make sure to check for any errors about bad debts, late payments, and your credit history.
6. Establish a Good Credit History
This is a good time to build up your credit report by getting a credit card and making the payments on time. Do the same for your utility bills and pay it off as soon as you can.
7. Save Money for Downpayment
Commit to a certain amount of money to save for your down payment. The more down payment you can provide, the lower the interest rates for a mortgage. Aim for 20% of total home price.
8. Increase Your Income
Now is the time for greener pastures. Ask your boss for a raise, or look for a second job to get an income boost towards your dream home.
9. Plan A Budget
Use the last month’s receipts to get a picture of your spend habits. Take into account your food, utilities and rent and some other unexpected purchases. Then, cut out on some luxuries and put them instead towards your savings account.
10. Reduce Your Debt
Lenders typically check for a person’s debt load, which should be not more than around 36% of that person’s income. Debt load includes mortgages which should be at around 25-28% of total household net income. Cut your credit card revolving balances, student and car loans to an acceptable 8-10% of your net monthly income.