Why Debt Consolidation Is a Good Idea
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. Documenting your monthly income and the debts you are to pay is something you need to do when preparing to apply for a mortgage. You will need to give the lender pay stubs for two weeks so that they verify the income you get. If you get your income from various sources, the whole procedure will be more complicated for you. Once the lender is sure that you can pay for the mortgage, they will have your mortgage approved. If there are large debt payments that you need to make, then you will only be approved for a small mortgage. The best thing for you to do is pay these debts off before you can apply for the mortgage.
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. When you have a low credit score, it will be vital for you to have a cosigner who is qualified. It is also possible for you to get the mortgage after you wait until you have a good credit score. 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. It is important for you to know how much house you can afford comfortably before you meet with the lender. You should sit down and calculate the total amount you will need for your home together with the taxes and insurance added. It will be best to have an amount that is less than 35% of your total gross income. You should aim at getting a house payment that is not more than 25% of your gross income.
It is also good to decide the amount you will save for a down payment. When you have analyzed the credit and worked on your budget, you will then need to work ion your down payment. You should know that the real estate agents tend to encourage you on getting the property that is more costly than what you can afford. You may also find that you are facing the temptation on your own. You should make sure you only go for the payment you will manage to pay when your financial state is either good or bad.