Having your own property> can either be a burden or a financial asset. To lean forward to the latter, you have to make the right choices. Are you thinking of buying your first house? In this economy, acquiring property is not as easy as it was before.
To help you make sound financial choices, here are a few things you should consider.
1. Save up a substantial amount of money
There are a lot of newly-built townhomes in Riverton, Utah, and other areas that have a reasonable down payment. Having more than enough money for a down payment (at least 10-20%) is recommended if you want to get a better mortgage plan and be more financially secure as you’re paying it. No-down options are also available, but they are not recommended for people who don’t want to pay a high amount of interest.
2. Build a good credit score
Mortgage lenders will be more willing to let you borrow money if you prove that you can pay it off, and having good credit is the key. To build your credit, pay your credit card bills and loans on time. Only borrowing what you can pay can help you achieve this, so avoid spending too much money on things that you don’t need.
3. Raise your current income
Instalments are usually limited to 40-50% of the borrower’s income. To have a better chance of being qualified for a loan, choose a house that won’t go over 40% of your income from mortgage payments. Apart from income, banks also consider the borrower’s job stability and age. You will find it easier to get a loan if you have a stable job and have enough earning years to pay off the loan.
4. Consider getting a shorter repayment tenure
The repayment tenure is the amount of time for you to pay off the loan completely. Getting a longer repayment tenure will allow you to pay smaller amounts, but it will also have bigger interest rates. If you don’t want to pay double or triple the loan amount, opt for a shorter repayment tenure. Your monthly payments will be higher, but the interest will be substantially lower.
5. Plan a budget and stick to it
The most important thing that first-time borrowers should do is create a budget and stick to it, even before considering taking out a mortgage. Make sure your budget is enough to cover basic needs apart from your monthly instalments. Otherwise, you may fall into a financial hole with non-repayments and penalties.
6. Make sure you understand additional charges
Additional charges include administrative, processing, and service fees that banks put on top of the mortgage payments. While discussing the loan with your bank, make sure you understand what these charges are for, how much they are, and when they are supposed to be paid (one time or monthly).
Buying a house for the first time need not be a daunting task. Being educated with the basics of mortgage and loan options is the first step to making the right choice. With these six tips, you can do just that in no time.