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4 Important Mortgage Tips for the First-Time Home Buyer Arranging a mortgage certainly is a big commitment. It’s therefore important that you find the best deal possible if you are a first time home buyer. To get approved and qualify for a decent rate, you will need to be in good shape, financially speaking. This means that you must be aware of certain things before you can arrange for the mortgage. Here’s a look at a few tips that should help you secure the best deal possible. Budget Before you apply for the mortgage, it’s vital that you take a bit of time budgeting. First off, consider whether you can afford to pay back the amount you’re borrowing. Next, you’ll want to make sure that the amount you’re borrowing will be enough to cover the purchase of the property as well as the associated fees. Do you expect to have any problems with the monthly repayments. What you’ll need is a mortgage calculator to work out the math, so that you’re adequately prepared before going to see a lender.
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Two of the biggest factors your lender will consider when determining how much of a risk you are are your credit history and credit score. For this reason, you should take a look at your credit report before applying for the mortgage. The last thing the lender wants to see is that you have credit cards with huge balances. So make sure you’ve paid of your debts, or at least tried to keep the balances low. Not having any outstanding loans, such as when you’re financing a new car, also helps. Having good credit shows your lender that you’re capable of managing your finances well, which increases your chances of getting approved. Loan term This certainly is one of the topmost considerations. While a 15-year mortgage may be provided at lower interest rates, your monthly payments will be bigger than if the repayment period was stretched to 30 years. If you can afford the large payments, taking a shorter term loan would be a good idea. Job stability is important It helps if you have a stable job, because most lenders need to see that you have been in a certain job for a good amount of time. So if you’re considering switching jobs, you may want to secure the mortgage first before going ahead. Many mortgage lenders only consider applicants who have been in their current jobs for at least 3 – 6 months. Remember that one of the things they’ll need is proof of income. This means obtaining the relevant documents from your employer. You might also be asked to provide your last three months’ pay slips and bank statements so the lender can have a look at how you’re earning and spending money.