I’ve got some great mortgage advice for you today! With the possibility of buying a new home on our horizon, it is time to start thinking about everything that comes along with it! While the house hunting part is super fun, the most important part is learning as much as you can about getting a mortgage!
When we bought our first house, we were utterly clueless. We bought a house when we were nowhere near ready (we had over $60K in student loan debt PLUS our cars!), we financed 102% of the value of our home with a rural development loan because we couldn’t afford any kind of down payment, and we took money out of Chris’ IRA to pay the closing costs.
In short: mistake, mistake, mistake!
Getting a mortgage will be one of the biggest financial commitments you ever make. So, it goes without saying that you shouldn’t go into it lightly. As a first-time buyer, you won’t have much experience with mortgages and the way they work. With that in mind, you won’t want to opt for the first offer that comes your way and you’ll want to do everything within your power to get the best deal you can. Here’s what your bank may not tell you.
Mortgage Advice For First Time Buyers
Your Credit Score Does Matter
There are so many lenders these days that tell us poor credit is acceptable. You may be able to get a mortgage with a poor credit history, but the interest you pay to your lender will be sky high. The best thing you can do is to take as much time as you can spare – months or years- to work on your credit score. Settle as many debts as possible and put as much money as you can into a savings account. Showing that you’re responsible with your money will go a long way when it comes to getting an affordable mortgage.
You really either want to have an outstanding credit score or no credit score – our goal is to hit that no credit score target! I know you might be wondering how you can get a home loan without one, but it is possible. It is through what is called manual underwriting through a bank – where the loan officer actually checks your income history, payment history, etc. to see if you’re reliable with money rather than just pulling a credit score.
You Do Need Advice
Browsing the internet and mortgage comparison sites are no way to find your perfect mortgage. When you aren’t familiar with mortgages, you may not fully understand the terms and conditions. You also may not know where to look in order to get a mortgage that suits you best. Getting financial advice from professionals, like Altrua Financial, is a great way to get answers to the questions you have. The more you understand, the better chance you have of finding a good mortgage and remortgaging in the future.
Do Your Own Math
A mortgage advisor can tell you what you can reasonably afford by knowing your income and expenditures, but only you can really know what your budget is. You won’t spend the exact same amount of money every month, and mortgages are only worked out on averages. So, before you start applying for mortgages it’s wise to calculate what you know you spend each month. Take the little things into account, like family birthdays, meals out and treats you may have every now and again.
Also be sure to leave room in your budget for possibly making extra payments on your mortgage as well to pay it off as quickly as possible! Knowing what you can really afford before you go is key to not getting more house than you can swallow.
Stay at Your Job
When we bought our first house, I had just switched jobs and we nearly didn’t qualify because of that very fact – and I was working for one of the largest mortgage companies in the nation! Don’t let this easy mistake get you off track towards your goals!
Thinking about getting a mortgage may lead to thinking about other big changes too. You may have wanted to change jobs for a while but never had the opportunity. Unfortunately, even if the opportunity arises, it’s best to stay in the same job while applying for a mortgage. The longer you’ve been employed by the same company, the better it looks when it comes to getting a mortgage. It doesn’t mean you’ll have to stay there forever. In fact, the second your mortgage is through you can start looking elsewhere. But loyalty and stickability is important to lenders so the length of time you’ve been at your job will show how long you’re willing to work at something, including paying off a mortgage.
Not everything your bank tells you should be taken to heart. When it comes to getting your first mortgage always make sure you’re in the best financial position you can be and always get a second opinion.
