Are You Ready to Apply For a Mortgage? Most Are Not. Here is Why
If you “must own a house no matter what,” this is a sign you should really research your finances and the market to make sure it is the right time to invest in a house.
When you are all too eager to own a home, ask yourself if you are really ready to apply for a mortgage.
Can You Really Afford a Mortgage?
There are many costs associated with a mortgage, in addition to the mortgage itself. Survey fees, land registry fees, Stamp Duty Land Tax, and mortgage broker fees are just some of the additional costs that can be associated with purchasing a new home or property. Also, consider that income not only affects your ability to pay a loan, it also affects what type of loan you can get from a lender. Before shopping for a mortgage, research all the extra costs associated with a mortgage, and how your income level will affect your mortgage rate.
Weak Credit Score
Even if your credit score is not “bad,” it can still have an effect on your loan. Technical errors on your credit reports — such as wrong information or mistakes — can impact interest rates, or even cause rejection. Obtaining reports from Experian, Equifax and CallCredit is easy. Check through your reports and see how your score looks. If there is room for improvement, it may be worthwhile to spend time improving your credit or correcting mistakes before applying for a loan.
You Don’t Know What to Look for in a Mortgage
It is not hard, but everyone who wants to apply for a mortgage needs to research their loan options. There are:
- Repayment mortgages
- Interest-only mortgages
- Pension mortgages
- Endowment mortgages
- Islamic mortgages
After you investigate the mortgage types available, speak to several lenders, at banks, insurance companies, mortgage companies, and so forth. Since their companies have a financial stake in what loan you choose, the options they offer you may not always be in your best interest. You need to have a good grasp of your options to be able to make the choice that is right for you.
You Don’t Know What to Look for in a House
The same thing applies to actually buying the house. If you don’t know what to look for in a property or a home, it is easy to get ripped off. Knowing what questions to ask gives you a stronger negotiating position. There are plenty of resources available online that give buyers an idea of what to look for when viewing properties.
Buying a home is a big decision, so ask yourself the hard questions. Perhaps your financial position is inadequate, perhaps the market is unaffordable, or it just may not be the right time in your life to settle into a home. Research will help you learn if you are really ready to apply for a mortgage.