Most people who buy a home will use a mortgage to do so. Mortgages are long-term loans and usually come with a lot of complicated terms. The process of qualifying for and getting a mortgage can be difficult, and it’s important to do everything you can to help the process go smoothly.
Here are some things to remember – because most people forget about them when setting up a mortgage for the first time.
Start Early
Many people search for homes and pick one out before ever thinking about a mortgage. But it’s key to remember that you should do the mortgage work before ever looking for a home. Though you can’t actually get a mortgage before you have a specific home, you can get pre-approved. With a pre-approval, you will have an idea of what you can afford. You can work through a broker or online service, but it also makes sense to talk to your local bank as well. They can advise you about getting a mortgage in your state and even help get your loan started.
Watch Your Credit Score
Most people worry about things like having a down payment and whether they have enough income to qualify for a mortgage, but one of the most important factors (and one people often forget about) is their credit score. Having a good credit score is one of the most important factors when it comes to getting a mortgage. To get the best interest rate on a loan, you need to have a high credit score. And if your score is too low, you may not qualify for a mortgage at all.
Consider Special Programs
There are numerous mortgage programs out there, many of them geared toward first-time home buyers, and it’s important you don’t forget about them. Talk to your real estate agent or lender about whether you might qualify for such programs. Some are based on income, others on where you are buying your house, and you can even qualify for special programs if you are a military veteran.
Insurance and Taxes
It’s not necessarily that people forget about insurance and taxes, but many forget to calculate the cost into their monthly payment. Most lenders will expect you to pay these costs monthly into escrow, and are simply tacked onto your payment. That will add hundreds of dollars a month beyond the principal and interest.
A mortgage is a large, long-term financial commitment, so you want to make sure you get it right. Remembering these items will help make getting a mortgage less painful.
