When you are thinking of leaving the renting field and getting a house of your own, you may have a difficult time knowing how to get a mortgage. Lenders have now become strict on who they approve to get the loans due to the housing crisis that happened several years ago.
Knowing the debt obligations you have every month is the first thing for you to do. When planning to get a mortgage, you should note down your monthly income and the debts you are to pay. For the lender to verify the income you get, they will ask for two weeks of pay stubs. The whole process will be harder if you have more than two sources of income or if you are self-employed. You can only get the mortgage approved once the lender is sure you can make the payments. You will get limitations to the limit the loan can be approved for if you have large debts to pay. It is best that you pay off these debts before you can apply for this loan.
When thinking of getting a mortgage, you will first need to check your credit health. You need to have a copy of your credit history and your recent credit score. Ensure your report does not have any errors or negative marks like making late payments. You will require to have a qualified cosigner if your credit score is low. You can also choose to wait until you have improved your credit score before you get the mortgage. Before you choose to apply for the mortgage, it is best for you to stay several months without applying for new credit.
Additionally, you will need to determine the budget for getting the mortgage. You need to take your time to know how much you will afford for a house without stressing yourself before going to the lender. You should sit down and calculate the total amount you will need for your home together with the taxes and insurance added. You should ensure the total amount is not more than 35% of your gross income. You should aim at getting a house payment that is not more than 25% of your gross income.
Ensure you have also made a decision on the amount you have to save for the down payment. You should work on the down payment after selecting your budget and analyzed your credit. Keep in mind that the real estate agents will try to convince you to get more house than you need or can afford. It is also possible for you to be tempted yourself. On the other hand, the best thing is to only go for the payment you will be able to pay anytime; whether the financial state is a good one or a bad one.