When you are out in the market to purchase your first house, the process is often overwhelming. Those who are familiar with everything related to the market find it quite simple; however it can be a little daunting for first timers. Especially the mortgage process, there are certain things that you must know about it and this is where the Bournemouth mortgage advice experts come in.
You should contact a professional before getting yourself involved in home buying. Meanwhile, read the following tips so you can prepare yourself before the actual process starts:
1. What is credit score and its impact on your mortgage?
It is smart to calculate your credit score before finalising the deal. The credit score can make a huge difference on the interest amount that you pay and the kind of house that you can afford. For instance, if you are applying for a £200,000 mortgage, then over a period of 30 years, you will be paying £138,324 in interest with a 750 credit score. However, if you have 650 as you credit score then you would have to pay £173,324. So you see there is a £35,000 difference because of the credit score.
2. Don’t Overburden yourself
Just because your credit card’s limit is £4,000 that doesn’t mean that you go all in and spend all of it. Same is the case with your mortgage, maybe you can qualify for a higher mortgage amount but that doesn’t imply that you overextend yourself. Remember, that your mortgage deed will have an impact on your finances so make sure that the new deed isn’t going over your budget and it fits you bank’s standard.
3. Complete your Documentation
Professionals suggest that you prepare your documents before walking into the mortgagee’s office. There are certain things such as your identity, income statement, social security card, W-2s etc. that are required if you are applying for mortgage. These are only a few things that are required, for a detailed list visit Bournemouth mortgage advice specialists. It is better to go prepared so you don’t waste your time.
A mortgage pre-approval is exactly the same as full mortgage approval, however, it is a document that you have without a specific property in mind. Before you start exploring the market, it is better to have a pre-approval. It can be a valuable tool as it holds a lot of weightage. This shows the broker that you are a serious buyer and the payment won’t be difficult. One thing that you should know is that pre-approval and pre-qualification are two different things.
5. Consider FHA loan
In order for any buyer to meet the requirements of conventional mortgage, they must have a minimum of 620 credit score. In case your credit history is a little borderline, then it is better that you consider the FHA loan. This is designed specifically for those who aren’t qualified enough. However, the only problem with FHA loan is that it is a bit expensive compared to the conventional mortgages. If you aren’t qualifying for the mortgage then going ahead with FHA is great.
6. Mortgage Insurance
Private mortgage insurance is paid if you make a down payment on your mortgage that is less than 20 percent. Make sure that you include this in your budget because it can significantly add to your total amount. These rates differ depending on the down payment, mortgage length and credit.
7. Don’t Settle for the First Offer
New and seasonal buyers alike make a common mistake of accepting the very first mortgage offer. You might think that there is a small difference in the offers, however these small digits can add to a lot over the course of your mortgage. You can save up to thousands of dollars in 30 years so it is suggested that you look around and go for the best offer.
8. Going Small Is Good Sometimes
Don’t aim for the big names; look into the small lenders as well. While national mortgage lenders might be your first choice, you might miss out on the unique lending programs set by local banks especially for first timers.
9. 15 Year Mortgage
Choosing the 15 year mortgage plan may help you save thousands of dollars and give you the possession of your house in half time. If you want a less expensive house then this plan will be great for you, if you can afford it.
Buying a new house for the first time can be intimidating but with proper guidance and support you can do it easily. Before you go shopping make sure to keep these tips in mind and consult an expert.
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