Most of us have been raised to appreciate the significance of providing a stable form of shelter for oneself and one’s family. For the most part real estate has been lauded as a primary asset and a steadfast investment that has been trusted over time. The process of acquiring a home can however seem like a gigantic task wrought with bureaucracy and jargon. Such buzz words as interest rates and foreclosure are usually enough to dissuade even the ardent applicant. There are however some pointers that can be taken to make access to a home a reality.
Given that the most common way of purchasing a house in modern times is through mortgage financing, it is of great importance to be aware of one’s credit score. Most negative entries in one’s credit score can be detrimental to one’s effort to buy a house. There is also the ever imminent threat of identity theft. The manner in which your credit history performs serves as an indicator of your nature as a debtor. Late payments, overdue settlements and bad debts are all factors that can impact negatively on your attempt to access a home loan.
It is always a good idea to save cash and have it in hand, once you start considering looking for a mortgage. Because of the volatility of the financial markets one can seldom predict what the bank will require and how much one will have to come up with as deposit or otherwise. By having a healthy down payment, you also reduce the monthly installments that you have to pay on the house making it easier in the long run. It also shows a sense of preparedness and ability to continue payments for the life of the loan.
Another consideration that usually goes unsaid is the fact that you should maintain steady employ prior to getting a home loan. In this new age when entrepreneurship and ‘being one’s own boss’ is a dream that most pursue, leaving your job right before applying for a home loan can have disastrous results for your application. Sudden changes in your employment status can be the difference between getting the desired finance or not. In some instances, it also affects the type of deal you get as your state of employ is directly tied to your perceived risk.
In making the road towards mortgage finance easier, paying off existing debt and avoiding new debt is also crucial. The amount of pre – existing debt you have has a positive relationship with your prospects of getting a mortgage. Among the different criteria employed when assessing a finance application, banks look at your debt – to – income ratio. A high debt ratio will usually result in a lower mortgage amount or even rejection.