What is your dream house like? Is your ideal house big or luxurious with large windows and surrounded by a pool, or would you like it to be a glass house with a beautiful garden outside? Or do you prefer a simple and tiny house for yourself or your small family? Whatever your dream house is like, it is vital to know all the factors you need to consider buying your home.
However, more than knowing the factors to consider in purchasing your dream house, it is essential to know that not all factors are about fun and excitement. Considering that buying a house is one of your life’s major decisions or accomplishments, there are always costs involved in it.
Frequently, the costs involved, especially the mortgage payment, are the critical factor that hinders you from owning your dream house. Fortunately, there is no reason to fret. Knowing these five important facts about getting a mortgage to buy a house, be ready to live soon in your dream house!
Home Affordability Based On Your Income
You deserve success and a comfortable life, and these can be attainable with the right strategy, especially in purchasing your dream house. However, no matter how luxurious and fabulous your dream house is, the blessing can be a burden if you have difficulty paying your mortgage every month. You have to remember that a house mortgage is not the only cost you have to pay as there are other daily expenses that you have to pay for a house purchase.
Whether you are single or married, you must figure out how much house you can afford. You must base the affordability of the home that you plan to purchase on your income. You have to consider if your mortgage payment will exceed by more than 25% of your gross monthly income.
If your house mortgage payment does exceed your monthly income, then you must think thoroughly if buying a new house will be useful for you. After all, it will be suitable for your well-being if the process of attaining your dream house is smooth.
Monitor Your Credit Score
When you apply for a mortgage loan for your house, lenders would always take at the following issues in terms of your ability to pay your mortgage: your income, expenses, lifestyle, and your credit score. Thus, you should check your credit score before applying for a mortgage loan for your house. You should get to check first your credit score before the lender.
Your credit score will say a lot about your creditworthiness. Basically, a credit score ranges from 300 to 850. If the lender sees a credit score near 850, the lender will most likely grant your mortgage loan application for your house.
There are many ways to monitor your credit score, and one of these ways is to call the credit reporting agencies. To know more about house mortgages, especially their connection to your credit scores, you may visit Crediful.com that will enlighten you and introduce you to helpful information in buying your dream house.
Know the Different Types of Mortgages
Choices or options are essential in making tough decisions, and fortunately, you will never run out of them, especially in purchasing your dream place. It is always worth it for a home buyer like you to know what type of mortgage loan will suit you best. The most common types of mortgages are Conventional Mortgages, Federal Housing Administration (FHA) Loans, and VA Mortgages.
If you plan to avail of the conventional mortgages, you present vital documents that will show your employment history, stable income, and strong credit score, which should be 620 or higher. You must also make a down payment of at least 3 percent.
If you cannot pay a sizable down payment and want less stringent credit requirements, government-insured loans such as the Federal Housing Administration (FHA) Loans and VA Mortgages are ideal for you. In FHA Loans, you just need a minimum credit score of 580, but a score of 500 is sufficient as long as you can pay 10 percent down.
On the other hand, Veteran Affairs or VA loans are more flexible with low-interest mortgages that active and veteran U.S. military members and their families can avail. This type of loan is also a government-insured loan, specifically the Department of Veteran Affairs. The good thing about VA loans is that it will not require you a down payment, which is more flexible than other loan types.
Decide on the Mortgage Term You Want
A mortgage term refers to how long you would like it to take you to pay off your loan. Some mortgages have a typical 15 to 30-year period. Some mortgages even have a 40-year term. As a homebuyer, you have to think of the advantages and disadvantages before choosing what mortgage term will fit you best.
If you take out a longer-term, the advantage is you will be paying low monthly repayments. For long term mortgages, chances are you will get an affordable home, and you will tend to overpay your mortgages because of the term’s flexibility. However, the disadvantage is the possibility of paying even at your retirement years, which can really be very exhausting.
You may pay a higher monthly mortgage payment for a shorter mortgage term, but such time will also spare you from paying high interest. If your monthly income is more than sufficient to augment all your monthly expenses, including your house mortgage payments, then a short mortgage term suits you.
Get Prequalified
There is no guarantee that the lender will automatically approve your house loan even if you can afford to pay a particular house loan. Thus, you should get pre-qualified and present the lender your documents showing your income, employment history, assets, and even debts. This will allow the lender to decide the loan amount he will grant you for your home purchase.
Takeaway
Owning your dream house is undoubtedly one of your bucket lists as living in your dream house is a beautiful dream come true. However, it is a dream that comes with important considerations, such as your capacity to pay the significant expenses involved or the mortgage cost. Now that you know the five essential facts about getting a mortgage for your dream house, you are one step away from living your beautiful dream!
