mortgage rate trends

When it comes to buying a home, especially your first, it’s a decision that requires you to consider a range of factors. What’s your preferred neighborhood, your budget; your fitness for mortgage financing?

To make the whole process much easier for you, we’ve compiled a list of 12 things to do before you apply for a homeowner’s loan.

These tips will help you along the way in securing that mortgage loan and buying your home.

Carry out Research

Several calculators will help you find out how much mortgage you can afford; they are not always exact and only give you a general estimate of what to expect.

You can then check out properties in the location you would like to get a house and the prices attached to each of them; consider the distance to your work and stores you might need to frequent.

Decide how long you intend to pay the mortgage for and if you want to do it yearly or monthly. 

Voting Registration Impacts Your Mortgage

To avoid frauds these days, several mortgage companies are beginning to research their borrowers and confirming if they are registered to vote or not.

If you’re not registered on the electoral roll, the lender may not be able to ascertain your identity and will not be willing to lend to you as they cannot officially confirm that you are really whom you say you are.

To avoid this kind of bad effect on your credit score, make sure you’re registered before applying for a homeowner’s loan.

First Mortgage Tips

Many mortgage companies might offer to allow you to place a very low deposit before getting your homeowner’s loan; it is recommended that you don’t take this deal.

Try to put a more significant deposit, so you don’t have to borrow as much, and you can pay just as quickly.

These firms might even be more willing to lend you homeowner’s loan when they notice that your deposit is high as this shows that the chances of your house falling into negative equity is relatively low.

You are also advised to save for repairs and upgrades you might want to carry out in the house before you move in.

Find Out What You Can Get From the Government

There are some schemes put in place by the government to help people quickly buy their first home.

Find out which one you’re eligible for and then apply for it.

There is even a scheme that allows you to own part of the house while placing the other half on rent.

There are also others that enable the government to lend you a certain percentage of the money to reduce the homeowner’s loan you would need. 

Take Care of Your Bills

This isn’t rocket science. If you want your credit report to look good, it is essential that you always pay up your bills.

It will help you impress the homeowner’s loan company as it shows you’re not one to owe or default on payments.

It will also help your history because when you default on your payment, it shows up on your credit report and may jeopardize your credit chances.

Get Rid Of Debts

This is just as important as paying your bills; you need to ensure you don’t have any overdrafts or debts on your file before applying for a homeowner’s loan.

This could significantly damage your chances of a homeowner’s loan, as most mortgage firms will not be willing to lend to someone with an overdraft on their file.

Avoid Applying for New Credit

When you try to get credit shortly before you go for a mortgage, it doesn’t look good on your credit scores.

You should also avoid payday loans as this is bound to reflect on your file and give the impression that you are not suitable for the loan and you’re struggling to make ends meet now.

Mortgage Calculators

After getting your mortgage, you can apply for additional lines of credit but not before. Any inquiries on your credit scores can negatively effect your loan application.

Evaluate Your Credit

While you’re trying to make your credit report appear stellar, you also need to make sure that there are no blunders on your credit report before you apply for a homeowner’s loan.

Banks can make blunders on your account that you’re not aware of, check your file before you apply.

If there are personal details that are not up-to-date, make sure you update them before applying for the homeowner’s loan.

If you apply for a homeowner’s loan and then realize there’s a mistake in your report, you can directly contact the credit reporting companies adn the mortgage lender to amend the blunders.

Should I Hire a Mortgage Broker?

This is another decision you need to make before proceeding with your mortgage application.

Do you want to apply with a broker or go directly to the lender? Carry out your research on the benefits of both sides before making a choice.

When you choose to go with a broker, they diligently guide you through it all and simplify all the processes for you.

Direct or not, you will be asked for legit documents by both parties to prove you’re suitable for the homeowner’s loan.

Make a Decision in Principle

This is knowing how much you can get from the mortgage firm before you put in an offer; this will save you from applying for an amount you won’t be able to get.

You can check on your credit score and then get the mortgage in principle, which only lasts for about six months after you get it.

After that, you will need to get it all over again.

Put a Pause on Your Spending

Sometimes, people end up spending unnecessarily just before applying for a mortgage loan.

This reflects badly on your credit score, especially when your credit card debt is enormous. Those ‘little’ spending decisions could end up seriously hurting your chances of a homeowner’s loan.

So, pause the spending till you get your homeowner’s loan approved. 

Determine Your Method of Financing

You also need to know how you intend to finance your homeowner’s loan once you get it.

Decide whether you’ll be getting security to ensure that the rates will not increase over the years.

However, if you believe rates will drop with time, you can stick to the adjustable rates, which are also offered.

Sandra Royal

By Sandra Royal

Sandra Royal is a financial analyst, writer and editor.

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