An industry service from the Real Estate CyberSpace Society!
Are you in the mortgage market busy comparing the rates that are being offered by the different lenders? If answered yes, you must be wondering about your financial condition to check whether or not you can make timely payments towards your mortgage loans. With the present year coming to an end, the mortgage market analysts predict the mortgage rates to rise higher than what they are at present. S, if you wish to take out a mortgage loan, don’t forget to consider ‘how much house can I afford’ before sealing the deal so that you don’t end up with the wrong mortgage loan. Here are some tips that you need to consider in order to get the best mortgage loan in the market.
Enhance your credit score: You should be aware of the fact that the current mortgage industry is extremely stringent about their lending criteria. They only lend to people who have a good credit standing so that they may remain sure about their repayment ability. So, if you have a poor credit score, you should ensure improving it so as to get a loan which is within your means. Take all the credit repair steps that are needed to enhance your score so as to grab the loan with an interest rate that is covetable.
Calculate your affordability: Before you approach your mortgage loan lender, you should calculate your affordability so that you know that the amount of loan that you’re taking out is within your means. Check your total income, total monthly expenses and the portion of your income that goes towards making the necessary expenses. If you still feel that you can afford the mortgage loan amount even after meeting all the other obligations, you can take steps to get a mortgage loan.
Repay your debt obligations: Apart from the 3-digit credit score, there’s another figure that is checked by the mortgage lender and this is the DTI ratio. This is the ratio between what you earn and what you spend towards all your debt obligations and this is why it is known as the debt-to-income ratio. If your DTI ratio is high, this will mean that you have too many debt obligations in accordance with your income and so you should repay your debts to lower your DTI ratio so as to get the mortgage loan with a lower rate. When you have a high DTI ratio, the lenders will lower their risk by charging high rates from you.
Shop around: Before sealing the deal with a particular mortgage company, you should shop around and compare and contrast the rates that are being offered by them. You just have to get multiple quotes from the companies and if you do this online, you’ll even be able to save your time and money. Choose the loan that offers you the best terms and conditions at the lowest rate and at the lowest closing cost amount.
Therefore, when you’re about to take out a home mortgage loan, ensure following the above mentioned steps so that you don’t end up taking a wrong loan and defaulting on the payments in the long run.