5 Essential Questions When Applying for a Home Loan
Before you consider any mortgage loans, home purchases, or refinancing options, you need to ask yourself the right questions. That’s because the answers will not only define the kind of house you will buy; they will also define your living situation for quite some time. In fact, they will also inform what kind of future plans you may have to turn done.
Consider this: You have your current job, but what if later down the line, your employer asks you to relocate to their main office in another state? This is just the tip of the mortgage loan iceberg, and we are here to help you go deeper. Before making any decisions, consider the following questions as your home loan essentials:
1. What is your current lifestyle? What will it be like in the next five years?
What is your daily living cost? This is the baseline before making any big purchases, like securing a mortgage. You may already be financially secure now, but reconsider that when you are in your new home.
Often, there will be big changes or new-home growing pains that you will be encountering along the way. It’s not just about the utility bills; it can be as basic as purchasing food from a nearby or far-flung grocery store. These small costs rack up, so consider how your current lifestyle will change.
Aside from that, you need to think about the future. How sure are you that your new location will still be your home in the next five years? Earlier, we talked about career changes, but consider how your children will adjust or how a certain medical condition needs specific medical attention from a specialized hospital away from home. These kinds of lifestyle changes can easily make or break any home purchase or refinance, so be prepared for them financially.
2. What is your credit situation?
Looking into your credit score directly affects the kinds of mortgage loans you can have. Additionally, it helps you secure a good interest rate that is attainable for your current financial situation.
If your credit history is currently riddled with debt and other loans, you can lower your credit score and may have a chance to secure a mortgage of any kind. Thus, either consider improving your credit score first or look into the viable options within your current score.
3. How much is your income?
Related to maintaining your credit score is having a budget based on your income. This will better your chances of meeting your mortgage loan’s requirements and also improve or maintain your credit score.
Remember, never get into a home purchase or refinance of any kind if you know your current salary can’t pay it off effectively, or you don’t have enough savings to secure it. Additionally, having no set home income will be a turn-off to any lender.
4. How much can you secure for your down payment?
A down payment is crucial nowadays in the mortgage industry due to the demand for loans and the need to keep the lenders investing. Gone are the days of zero down payments or a rate of 20 percent is all that’s required to acquire the loan.
Thus, make sure to study the different terms and conditions of different lenders and how much down payment they require. Also, consider your current savings and if it is necessary to subtract from it or ideally, to keep it intact in case of emergency.
5. Do you have any other recurring payments?
Aside from utility bills or regular debt payments, you may be paying for other essentials such as specific healthcare or even another loan like for a car. These are the things that can easily eat up what is supposed to go to your mortgage, so account for them and make sure you are up-to-date on these payments and for until when.
Home loans are indeed the step you need to take to secure your housing future, but you have to consider it within your holistic financial situation and answer the right questions. Take note of these home loan essentials to truly feel at home and securely financed!
Looking for the right mortgage loans for your dream home in Colorado? We are Move Mortgage, your dedicated partner in finding the perfect mortgage to secure your housing future. Make your mortgage count with us!