“The paid-off home mortgage has taken the place of the BMW as the status symbol of choice,” –Dave Ramsey
One of the pivotal milestones in life is finally moving into your own flat that you could truly call your own. However, as most people could not readily afford a house and lot early on, most of them would settle for loans and home mortgages. Fortunately, this alternative sits well with most potential home buyers, but before jumping off the wagon and looking for possible houses on sale, it is imperative that you get your house mortgage application first.
Educating yourself is key when it comes to the potential approval of your mortgage loan. Remember, it is not always a guarantee that your loan would get approved, but being well-informed and prepared for it would certainly be to your advantage. After all, forewarned is forearmed. So, whether you are eyeing a house and lot in Angeles or elsewhere, utilize these useful tips first to make sure your loan application gets approved.
1.) Calculate your income and your monthly debt obligations
An integral aspect of getting approved for a mortgage loan is staying well within the confines of certain ratios lenders would use to determine how much you can afford for a mortgage payment. With this in mind, it is crucial that you start itemizing what other obligations, monthly debts you have and if your income is more than sufficient to cover that all that it would be possible for you to apply for a loan. Sizable debt payments such as auto and student loans would limit the size of the mortgage you can get.
2.) Determine your mortgage budget
Before even applying for a mortgage, get a realistic view of how much you can afford and what you are comfortable paying. Remember that these are two entirely different things. Your total house payment which includes insurance, taxes, and fees should be no more than 35 percent of your gross income in order for that to sit well with your other obligations.
3.) Give your credit health a checkup
A good rule of thumb to do before applying for a mortgage is to obtain your credit history report as well as your credit score. Double check and verify whether there are no errors on the report or anything that might hurt your potential chances for approval such as late payments. Your credit score should at least be 680 or anything about 700 as anything less might lead you to find a highly-qualified consigner. Remember, the lower your credit score is, the higher the mortgage rate you will pay (which would rack up those interest rates).
4.) Figure out how much you can save for a down payment
After you have done all the items enumerated above, your next step would be to determine how much you can save for a down payment which you put towards your first home. Consider putting at least twenty percent down payment to prevent private mortgage insurance which is costly. This is the insurance that would protect your mortgage lender should you foreclose even before building an adequate equity in the property. Before beginning the logistics of mortgage approval, keep in mind to commit to the maximum that you want to spend.
This article was written by Dominique Santos, a Filipino blogger. He is a big fan of interior designing, writing articles on home decor tips and guides specifically. He also writes about Real Estate and currently blogging for Amaia Land, developer of estates and condos in Manila, Philippines.