10 Things to Consider Before Getting Your First Mortgage
Real estate mortgage, debt, and investments are always scary. When you're getting your first mortgage, this is an even more truthful sentence since you're still unaware of how everything works in detail.
To help you make an informed decision, we decided to do a mash-up of ten things you need to consider before getting your first mortgage.
1. Don’t Go Looking for Homes Straight Away:
First of all, you should consult with a mortgage officer. This will filter out credit problems and allow you to see if you are free to go looking or if you have to solve credit-related problems first.
It will also allow you to set your investment threshold, so you don't fall in love with a property far beyond your reach.
2. Keeping a Debt-to-Income Ratio Down:
The Debt-to-Income ratio is pretty important, and you have to ensure you keep it down. As such, we highly advise you to start off by paying as much debt as you humanly can.
You have to know that the lenders will look at every loan you have, such as credit card debt, student loans, car payment and other passives. This tells them how much you can borrow, and if the payment is more than 42-43% of your income, you won’t get the loan in the first place.
3. Student Loans: Consider This
Of course, you should consider paying your student loans first, as stated above, but if you can't do it then try to refinance or consolidate it. It is up to you if you decide on buying a home sooner or simply stretching student loan payments.
4. Your Job Matters:
You need to ensure you always have a solid work history to show the lender. If you haven't got that, then it is going to be extra hard to get that loan. However, if you recently graduated and you already have your first job, which is a good indicator you have work ethics and a future that will allow you to pay the loan back.
Part-time jobs aren’t considered most of the times, but if you have one you can put it to work in another way – getting it to help you pay the debt as quickly as possible.
5. Document Everything:
From brokerage statements to tax returns, you need to verify and document everything. The lender will verify everything again before closing the deal, so make sure you have everything taken care of.
6. Don’t Spend While You’re Pending:
If your loan is pending then you shouldn’t go ahead and buy furniture on credit, buy a car, etc.
As mentioned before, the lenders will verify your history more than once, and you can seriously ruin your chances of getting approved by spending what you don’t have via credit.
7. Talk to Different Lenders:
Everyone has different policies, rates and more, that is why you need an experienced mortgage broker.
He or she will Shop around for the best conditions; after all, this is an important decision.
8. Talk to Different Closing Agents:
This point is like point seven, but this time we’re talking about closing.
As an added hint, let us tell you that there’s no shame in asking for advice to these two professionals as well as friends and family that have more experience.
9. Don’t Underestimate your Costs:
You need a lot of money even to pay for the closing costs, and you’ll also need surveys, home inspections, appraisals, etc.
Lenders also tend to ask for property taxes and insurance up front, so you should also consider this.
10. For Self-Employed Professionals:
If you own a small business, you’ll see that you need two years in business before you’re given a chance for a mortgage.
Finally, know that we are here for you and eager to help, so you should definitely check out http://www.ontariolenders.com/ for more information.