5 Things to Consider Before Applying for A Mortgage

Buying a home is no easy task. There are several things to consider before applying for a mortgage. You’ve come to the right place, as we talked about them below.

Credit Score

Maintain a good credit score before applying for a home loan. The score would show lenders how risky you are. The higher the score, the least risky you would be. Also, if you have good credit, banks would offer you the best interest rates.

Request for a credit report. Go through it and see if there are any mistakes. You could get your score improved.

The key to improving credit is paying your bills on time.

Debt

Don’t buy a home unless you can pay the mortgage back. If you miss a month, interest would collect and snowball to the next month.

Most lenders check your debt-to-income ratio when reviewing applications. They would see if you make enough and have any other debt. A reverse mortgage calculator is a great tool to use to know how much you will have to pay over the span of the mortgage period so you can plan accordingly.

Additional Payments

Acquiring the property isn’t the only thing you’ll be paying for. You would also have to pay hefty lawyer fees, and you’d likely have to pay the government too. The payment to the government is called the land transfer tax. Thankfully, first-time homeowners in Canada don’t have to pay it, or they’llhave to pay a very low tax. Look for a land transfer tax calculator online. How much you’ll have to pay depends on several factors.

Payment Period

Do not apply for a home loan with a payment period of 10-20 years. Life is unpredictable. You might lose your job by then, so you could lose your home too. The safest bet would be to choose a 5-yearending period. As you can imagine, the longer the payment period, the lower the interest you’d have to pay.

What happens if you haven’t finished off the loan by the end of the time-limit? You would have to renew the loan. So,how long before your mortgage renewal date can you renew your mortgage? Any time before the final 120 days.

Down Payment

The bank won’t accept your application unless they see adeposit on the house.Depending on the property and where you live, how much this would be would differ. However, it won’t be more than 20% of the asking price. Most people tap into their savings for the down payment.

If you’re applying for a mortgage from a government bank, the deposit won’t be high.

There are several things to consider before applying for a home loan. Make sure that you make enough to apply for a mortgage. Most of your salary would be eaten up by the mortgage, so you wouldn’t have anything left. Make sure that you have enough for a down payment on the house too.

Otherwise, the bank won’t accept your application. Speaking of your application getting accepted, the chances would be high if you have a good credit score. You can improve yours by paying any debt you have on time.

AGE

If you are of age 62+ you may not realize a reverse mortgage should be on your radar for loan shopping. Today’s reverse mortgages offer competitive interest rates and costs similar to conventional mortgage types. As with any reverse mortgage there is no prepayment penalty and you are welcome to make any interest repayment you’d like. Learn more about how reverse mortgages work at ReverseMortgageReviews.org.