5 Tips First-Time Homebuyers Should Follow when Applying for a Mortgage
Buying your first home is a grand step in life, and if you’re about to make that step, then congratulations are in order – you are about to open an entirely new chapter. Without a doubt, this is an exciting time and a rewarding step you’re about to take, but for all the wonderful things it will bring to your life, it’s also one of the most daunting and perilous steps you can take. Not only do you need to find the ideal property and weigh the many pros against the cons of living in a certain area, but you also need to know the different types of mortgages and choose the best type.
This is a crucial step you need to take towards becoming a homeowner, but when you’re doing it for the first time, you might not know how to maximize your chances of success. You need to get approved for a loan, yes, but you also need to get the best terms possible when choosing mortgages, and to do that, you need to follow a couple of best practices.
Here’s what you need to do to secure a great loan as a first-time homebuyer.
Create a budget and start saving money
First things first, if you haven’t started saving money towards a home purchase already, now’s the time to do it. Your goal should be to reduce your mortgage as much as possible by having some money you can put towards buying a home. You can take out a smaller loan and pay for the decorating of your new home on your own with your savings, for example, or you can simply take out a smaller loan because you have some money in the bank.
The more money you have in the bank, the better the chances of getting approved for a loan as well, as the lenders might be more inclined to give you a smaller loan. With all of that in mind, make sure to start saving money right now if you can, and put it in high-interest savings account to help your savings swell up faster.
Know how much you can borrow
Next up, you need to figure out how much you can borrow, approximately, and that’s something you should do even before you begin your property search. The most straightforward way to do this, without paying for any consultations and meeting with lenders, is through an online mortgage calculator. While these calculators won’t give you an exact number, they will give you a rough understanding of your borrowing potential.
This will be a good ballpark figure you can work with, and it will allow you to plan ahead and organize your finances. There are many benefits to getting a loan, but it needs to work in your favor, which means that you might need to work towards securing a bigger loan – a mortgage calculator will tell you what you need to know.
Consider working with a mortgage broker
One of the tried-and-tested practices that can maximize your chances of getting the best possible loan is to work with a mortgage broker. A mortgage broker can serve many purposes and help you navigate the lending industry, but most importantly, they will help you compare and find the best loans out there for your needs. If you are looking to purchase a property in an expensive real-estate market, like Australia for example, then a mortgage broker can save you a lot of money.
Australia is a good example of how aspiring homeowners will check in with a mortgage broker in Sydney and other expensive urban hubs to find better interest rates, and most importantly, get a tailored proposal according to their needs. A reliable mortgage broker can also maximize your chances of getting approved for a loan, and they can help you tidy up your application form because they know exactly what the lenders are looking for.
Wherever you’re from, though, make sure to use this example to your benefit, and find a mortgage broker who can help you secure the best mortgage possible.
Working on improving your credit score
Your credit score will be one of the defining elements when it comes to how much you can borrow, and the overall terms of your loan. Needless to say, you should aim for a high credit score if you want to get the best loan possible, but there are also ways to get a home loan with bad credit.
For the most part, though, if you want to secure a great loan, you should improve your credit score by settling all your debt, not breaching your credit card limit, and limiting your requests for new accounts.
Compare your options and look for a better deal
Last but not least, don’t settle for the first deal you come across. This is a complex and lengthy process, and you should tend to meticulous research and mortgage comparison in order to find the best lender who can accommodate your needs.
This is one of the most important things you need to know when buying a home, because the last thing you want is to settle for a mortgage that’s not ideal for your needs. Make sure to research your options carefully, talk to numerous lenders and financial institutions, and don’t be swayed into accepting any terms that aren’t perfect for you.
Over to you
Applying for a mortgage as a first-time homebuyer is not an easy task, and you need to be careful and calculated in your approach. With these tips in mind, though, you will maximize your chances of finding the perfect lender and the best loan terms to finance the purchase of your first home.
