Category Archives: Mortgage

Getting a Mortgage – A roof above your head

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If one is looking to get his or her first home then one does need a mortgage. I would suggest that even before looking to buy a house we must arrange the mortgage part. However if one has a good income, a bank balance and a good credit standing then one will be able to get a mortgage in silver quick time. However if one has the less credit limit and if one is self employed and not a very fat bank balance then maybe one will have to start a year earlier for the mortgage before even thinking about the house.

A mortgage broker’s opening line is always “Do you have a copy of your credit report?’ That line is enough to make the strongest heart sink. Without this piece of paper nothing can and will be done regarding the mortgage. Thus it is most crucial to meet the mortgage broker three to four times in the start of the process. In this very competitive market it has been seen that the agent will not bother to show you any house or home unless the mortgage papers are complete.

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Besides the documents there is one thing more than one will need and that is money. One will need money for down payment, a year’s worth of payment of taxes and insurances and finally closing costs. All in all one will need a lot of money. One will also have to make sure that one has some extra money as a buffer. This is in case one loses his or her job in the mean time. However there is an issue as to what should be the amount of down payment to be given. The thumb rule is twenty per cent of the total cost of the house. However the lesser amount one pays for down payment the higher will be the EMI. Also if the down payment is less than the twenty per cent that is compulsory then one will have to pay private mortgage insurance otherwise known as mortgage insurance premium.

btOne will get a lower interest rate if the down payment is higher. Hence the less one puts down; the more expensive will be the mortgage insurance and higher the interest rate. Here are a few points before getting a mortgage:

  • Before looking at homes it is better to meet a mortgage officer.
  • Pay off as much debt as one can as lenders will always look at your income and debts
  • Have good credit habits before going in for a loan as habitually paying your credit bills late will result in lowering your credit score.

  • Be prepared to document everything such as tax returns, bank statements to verify the source of income one plans to use.
  • It is good to show a solid work history as this gives the lender confidence in arranging for the loan.
  • Do not buy anything on credit while the loan is pending. Should one do so then in all probability he or she will be killing the deal.

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