It’s always important to get a good loan and it’s particularly a big deal for first time home buyers. First time home buyers are often just getting on their feet financially. So, how do you make sure that you’re ready for your first home loan?
There are five questions to help you find out. These are questions that will determine when you should venture into home ownership. If you can’t answer yes to each of these questions, you’re definitely not yet ready for your first home loan.
A steady regular income is required in mortgage loan approvals. Assess yourself if your employment situation is secure enough that you can commit to your first home loan. Being out of work is bad enough, and being out of work with a brand new mortgage is disastrous.
How much credit card debt do you have? How about car loans and personal loans? You can lie to others all you want but you can’t lie to yourself or the bank if you want to get your first home loan. Debt is a symptom of a greater problem which is not having enough money.
If you’re forced to use a credit card debt because there seems to always be more month than money, then you’re not yet ready for your first home loan. Is your credit score terrible? If it is, then it’s probably because you handle credit terribly. These issues need to be cleaned up before you get your first home loan.
Those are the two things that usually diverge. You have probably thought about all of your preferences in a home but take time to rank them. If you determine that you still can’t afford your dream home, what compromises are you willing to make? Would you rather continue to save and hold out for a dream home? Set your home purchasing priorities before shopping to avoid making spur-of-the-moment decisions.
If you don’t have a budget at all, start there before even considering getting your first home loan. If you have one but have a hard time sticking to your monthly allocations, work on your spending habits and saving skills. It will only get more difficult after getting your first home loan. There are many unseen expenses ready to catch you off-guard.
The standard for a deposit is 20% of the purchase price, however sometimes 5% may get your foot in the door. Do you have that much in available cash without disregarding your other home expenses? If not, you should consider waiting and saving for future purchase, unless housing prices and interest rates are rising so quickly that you may miss your opportunity.
If you’ve answered yes to all five questions, then congratulations! None of these aspects give you concern and you’re more likely ready for your first home loan. You re now ready for a smooth home buying experience, leading to a happy and responsible homeownership.
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