First Mortgage: Tips & Tricks

Mortgage loan is the biggest loan that they will ever take in life; therefore, it is important that the process of obtaining it is understood completely by the prospective homeowner. In the following paragraphs, we will take a look at some tips and tricks that will help you in taking out your first mortgages. 

Assess your Financial Situation

One of the first and foremost things that you need to do is to assess your finances. You need to know how much money you can afford to pay towards your mortgage payment. As a rule, ensure that your mortgage payment is lesser than 30% of your net monthly income. For example, if your monthly income is $6000, try to keep your mortgage payment within $1800. After the sub-prime crisis of 2007-08, lenders have become wary of lending to people who have a host of liabilities such as car loan, maxed-out credit cards, student loans, etc. After doing the assessment, if you find out that a mortgage payment will be more than 30% of your net monthly income, you might be better off clearing your other debts first. 

Prepare in Advance

As we mentioned before, borrowers are being put to additional scrutiny these days as the housing market is posting a recovery from the devastating crisis of 2007-08. Because of this reason, financial experts advise first-time homeowners to start the proceedings as early as six months to one year before they want to apply for a mortgage. Preparing for the mortgages involves checking your credit score to see if there are any discrepancies. Knowing how much you need for down payment and other fees can also go a long way in ensuring that your dream of owning a home does not face any last-minute hiccups. You should also get the required information about the documents needed for loan application so that you can work towards gathering them.