Buying a home is one of the most rewarding milestones one can achieve in their lifetime. It’s also one of the most expensive. If you’re new to the process and are unsure of what it takes to get a mortgage, below are some pointers to help you prepare.
Build Up Your Credit
A good credit score tells lenders that you can be trusted to repay your loan. If you have a low credit score, you’re going to have a more difficult time securing a mortgage. You’ll also pay more in interest.
Check your credit score for free at AnnualCreditReport.com. You’ll be able to order your report from all three agencies. And if you’re score is low focus on building it by paying off credit cards or any other revolving balances.
Know How Much House You Can Afford
Remember that you will need to drop a down payment on your mortgage, which is usually around 10%. You will also have other monthly payments in addition to your mortgage, including utilities, taxes, insurance, and maintenance. If your home is further away from work or school, then you may be spending more on gas or mass transit.
You can also save money by opting for a 15-year mortgage versus a standard 30, although your monthly payment will be higher.
If you’ve been renting, then you’re probably used to calling a landlord to make repairs when things go awry. Now that you’re a homeowner, you’re responsible for all repairs and maintenance. You’re also responsible for a down payment and closing costs, which could be thousands.
Bankrate.com, “How to Get a Mortgage.”