If you’ve been renting for years and are tired of throwing money away that you’ll never see again, you might be thinking about buying your first home. The idea of having a place that’s all your own, where you’re investing money you’ll see returned one day sounds very appealing! While renting is great for young people who aren’t quite ready to settle, buying a home makes sense if you’re in a more stable place in life. Find out more information about mortgages here that can help you decide if buying a home is right for you. But before you embark upon this exciting and life-changing step, there are some questions you must ask yourself. These questions will help you learn whether you are truly ready to take the step and take out a mortgage.
What is Your Credit Like?
Look at your credit score. Have you been diligent about paying off your debts on time, opening credit cards and paying them responsibly? Have you made some big payments like a car or student loans? Or have you racked up lots of debt that’s weighing you down and dragging down your credit score? This is a very important question to ask yourself before applying for a mortgage. The bank will only lend you this large amount of money if you can prove your track record of paying back loans on time. A mortgage is a major financial commitment so it’s important to make sure you have a good credit score before applying.
Do You Have a Stable Income?
A mortgage is only for someone with a stable income, period. You’re going to be making significant payments for years to come, and if you don’t have a stable job and income to back that up, guess what? The payments will keep coming, or you’ll find youself without a home. Make sure you have a job that’s going to keep you earning a reliable income and you’ll be ready for that first mortgage.
What are your Savings Like?
A mortgage is borrowed money but you still need savings before you can buy a house. This is because you’ll need to put down a chunk of money in addition to taking out the mortgage. In fact, the more money you can put down straight away, the more likely the bank is to grant you a mortgage. It also means that your credit score can be lower, because you’ll owe less money in the loan. So work on your savings and build up a solid nest before you think about buying your first home.
How Much Time Do You Have?
You simply cannot rush into a mortgage. Buying a home and taking out a mortgage is a process that takes a good deal of time to prepare for, so give yourself ample time to arrange your finances, work with a financial advisor and raise your credit score. If your rental lease is almost up and you’re desperate for a place to live, it’s not the time to buy a house. You’ll drain your finances and find yourself without a stable place to live. Rather, take your time and assess all of your options before deciding to apply for a mortgage loan.