We recently bought a house, after being sure that we'd never be able to own anything, because our financial situation wasn't allowing us to save up the enormous down payment required in my country, not to mention the fact that housing is really expensive compared to salaries where we live. Even once my mother provided the down payment for our place, getting approval for the mortgage from the bank certainly wasn't easy, because our monthly income compared to the monthly mortgage payments didn't seem nearly high enough according to the bank (because they could only consider our rental income from the rental unit in our house as additional income once we signed with a tenant, and couldn't do that when we were first looking for approval for a mortgage). We had to jump through a lot of hoops in order to be able to be approved for a mortgage, and a mortgage broker ended up being the key in our being able to get our mortgage. For those that don't have a mortgage broker to guide them, these tips from a reader are certainly useful, and many of them are ones my mortgage broker advised as well.Financial situations vary from person to person. Therefore, our definition of "financial freedom" varies. Should you arrive at a time when mortgage seems the best option, always remember that there are many criteria that you should follow before pursuing this. Given that your situation differs from another person's, your mortgage approach can be different. Here are the best tips from AAACreditGuide’s pre approval mortgage guide on how to get the best mortgage that will suit your needs:
Try To Be Pre Approved
Being pre-approved for a home loan can be extremely advantageous for you. After all, mortgage loans themselves can be pretty stressful to secure. So, knowing you can get one in advance, is a delightful sight.
- Try to get approved for the loan first, before actually looking for lots and houses.
- This allows you to know just how much you can spend on specific properties. This also removes any potential emotional attachment you can get to a house you may eventually not be able to afford.
- Getting your pre-approval is easy. Just call a mortgage lender and submit the requirements they need. These are usually personal and financial information.
- When you get pre-approved, the lender will most likely explain how much you can use to buy a house, and if there are particular interests. The lender will then get a pre-approval letter for your own records. Now, you will have funding available when a seller has finally accepted your bill.
This might sound a bit complicated. However, it's a safer way to find out how much loaned money you can spend for the home of your dreams.
Try To Be Aware of Limits
This is related to the previous tip. As you get pre-approved, you will at least have some idea of how much you can loan before you buy a house. However, before ever applying for a loan, knowing how much you can afford using your current money is just as important. So make sure you check out a home affordability calculator so you know exactly how much it is and what can be afforded.
By assessing your current financial status, including your lifestyle, you will get an idea of how much you can earn and save for your house.
- Always remember that lenders can access your financial reports. They tend to check and estimate amounts for pre-approval, based on your credit and income report.
- Unfortunately, lenders don't always take into consideration how much you really spend on insurance, fuel, daycare, and even groceries. This means you have to learn how to spend well, within or below your means, before getting a mortgage.
- Assess the kind of lifestyle changes you have to make in order to meet your mortgage’s monthly requirement. What sort of activities do you have to lessen? Learn how to communicate these things with friends and family. This will help them understand what financial obligations you’re about to undertake.
Try to be Stable
Lenders tend to avoid clients that are deemed high-risk. These are people who appear incapable of paying back loans. Typically, applications from people with low credit scores are rejected. If you find yourself in this demographic, always try to negotiate your case. Here are some ways:
- Show lenders that you are willing to go above and beyond your current lifestyle setting to find a method to pay them. The best way to do this is to secure a stable job with a steady income.
- If you plan on taking a mortgage soon, it is advised that you don't go and leave the city officially, or quit your job. Always create an atmosphere of stability in your credit.
- Always remember to apply good spending habits and try not to overspend.
- Check if all your accounts are in order and if you are capable of making savings.
Try to Look Around
Remember, the lender you're going to approach may not be the only one that's offering you mortgage deals. Shop around and look for other local banks providing different loan offerings.
- Always remember that each bank and lender have their own set loans. Each has varying interests that cater to different people.
- A fixed rate home loan does seem efficient and practical. But sometimes, a variable rate mortgage may be more beneficial.
- Always try to check which mortgage is best for your financial situation.
- Look at what other options are available.
- Find something that you can pay for based on your current income projections.
- Check if there's a way to decrease your loan interest.
Conclusion
We all have different financial situations. Your reasons to get a mortgage can be different from others. Always remember that you should always take a mortgage that is within your time frame and your financial capability.
Don't ever overestimate yourself to avoid more significant financial troubles. Plan ahead and stick to your schedule to make your financial journey a success.
See my disclaimer.