Buying your first home is always an exciting experience. Having your little roof in this challenging world is so relieving. Isn’t it? However, the way to your dream home is a little bumpy, as a first-time home buyer needs to be cautious about a few necessary things.
Here is a list of supportive tips that may facilitate ease to your struggle of buying the first-ever home.
Location and its compatibility to your financial efficiency
Location is the most crucial aspect. The busy lives today raise the need of living at the right spot from where the essential things are in proximity. Metro station, malls, bus stands, school (if you have kids), hospital etc.
Ask a few questions to yourself to take a correct decision on this part-
- How much is the latest cost of the location?
- How much mortgage may I need to apply for?
- Will I be able to encapsulate the instalments if the loan amount is big?
Etc. Etc. Etc…. Mind-boggling is the first stage of the process of buying an abode.
Try to increase the deposit amount more than the minimum requirement
The standard deposit percentage that all the lenders demand is 5%. Rest of the amount is covered through the mortgage for first time buyers you attain. It is better to give more on the deposit part to get less burden of the loan obligation.
The prime benefits of paying more as down payment are –
- You need to borrow less as mortgage
- The instalments are smaller
- Lenders give smooth relaxation in rates to those who are active in financial efficiency.
Remove the flaws of financial records
Property purchase is a big financial decision, and at every step, your finances come under scrutiny. From the builder to the lender, all want to know about your income, payment history, other debts etc. You must keep your financial and credit records flawless. The report obtained from the credit reference agencies should look clean and spotless.
- If there are delayed payments, make them now.
- If you have any unused credit card, store card, bank account etc. close them now.
- Do not take any new loan.
Try to attain an additional source of income
Money is required in abundance, and with more income, you can make things work in your favour. The home loan is unavoidable, as no one owns, saving big enough to buy a home. When the lender notices big figures on your salary slips, it approves the funds smoothly.
Whatever is the source of the earning, part-time or freelancing, a secure back up is a great thing to have. It also helps you buy a home at your preferred location. With more money, you can borrow big and can pay the instalments quickly.
Take care of the debt-to-income ratio
Now, when you have worked on the income part, it is the time to match it with the debt part. Having more debts in your name can cause complications on many aspects.
The two idol ratios in this concern are – 60:40 and 70:30
If the price of the property is high, the latter one is majorly the priority. It makes the lender put its confidence on your creditworthiness and attainment of lower rates becomes easy.
If applying for a mortgage with bad credit bring co-applicant with a good score
Oh, bad credit situation always creates obstructions in every financial decision. Forget about the property, getting a new credit card becomes difficult sometimes. However, the good thing is that nowadays, funds are available to poor credit scorers through next-generation online lenders.
Several efforts are still required despite their liberal approach. Arrange for a co-applicant with a good credit history to back your loan application. In that case, the lending company can easily trust on your repayment capacity. Besides, there is no other possible way to attain funds.
Conclusion
When it comes to home buying for the first time, even the small things have significant impact. You need to be on your toes and try your best. Home is a precious asset and a long-term investment too, and decision on this part cannot bear any delay. Act smart, play safe, and you can get your abode smoothly.