The word mortgage may conjure up a few feelings for you; excitement, dread, the feeling of finally becoming an adult. Purchasing your first home is an exciting time, but it can also be daunting. A mortgage is a significant commitment, and there are a few things you have to consider before signing on the dotted line. Before you take out a mortgage, here are the things you need to think about first.
Your credit score
Have you been looking after your credit? If not, you could find it difficult to get a good mortgage. Sure, there are some places that will give you a mortgage with bad credit, but there is one big drawback to this – you’re not likely to get a good deal! If you haven’t already, it’s time to check out your credit score. There are plenty of companies that will let you see your credit score and maybe even provide you with tips on how to improve it. It might take a little longer before you can apply for a mortgage, but building your credit score up is essential if you want the best deal.
Work out how much you can afford
Perhaps you have seen your dream home on the market, but you don’t know if it’s realistically within your budget? It’s time to get the pen and paper out, to work out how much you can afford. Make a note of all of your incomings and outgoings each month, to get an idea of what is left to pay the mortgage. If you’re struggling, is there anything you can cut out of your life? Can you make coffee at home instead of getting it from Starbucks? How about canceling that Netflix subscription or sharing one with a friend? There are plenty of unnecessary costs you may be able to cut out, to take you one step closer to that dream home.
Getting a mortgage with someone else
Are you going solo with this house purchase or will you be doing it with someone else? If it’s the latter, there are a few more things you’re going to want to think about. A joint mortgage application will look at the credit score and affordability of both people – meaning you both need to work on improving those two things. If you’re buying with a boyfriend, girlfriend or friend, then you’re going to want to make sure you’re covered if either one were to bail. You won’t necessarily have the protection you would if you were to sign a mortgage with someone you are married to, so it may be worth consulting a legal advisor before signing the contract.
Type of mortgage
There are plenty of different types of mortgage out there, so it’s essential to find the one that suits your needs best. If you’re a first-time buyer, then there are special mortgage deals out there, specifically for you. For most people, a 30-year fixed mortgage is going to be the safest option, but there are riskier deals out there if you can afford it! You can enlist the help of a mortgage advisor to find out what kind of mortgage deal is going to be the best for you.
There are plenty of things to think about before you get a mortgage, but these are some of the main ones to tick off your list. As long as you do your research, it doesn’t need to be as daunting as you once thought!