Based on the reports from the National Association of Realtors, mortgage interest rates haven’t changed from 4 percent since 2015. Despite this, rates are expected to reach at least 4.5 percent by the end of this year.
However, even if the rates are slowly rising, it’s still at its record low. If you’re planning to get your dream house now, these are the best tips to have your home loan approved right away.
Tip #1: Rebuild Your Credit History
When you’re applying for any loan, especially if it’s a mortgage, you have to make sure that your credit profile is in tip-top shape. While you’re prepping yourself to buying a house, you need to be sure that you’re responsible enough to manage your current debt. Make sure to pay your bills on time and try to pay a little of your outstanding balance by paying more.
Tip #2: Ask for a Preapproval from Your Lender
You need to get your mortgage preapproved first before you begin your house- hunting. This will help you determine how much you are qualified to borrow for your mortgage. Once your home loan has been preapproved, you’ll then have a more realistic expectation of which houses will fit into your budget. There’s a chance that you may even qualify for a mortgage that’s bigger than your yearly gross income.
Tip #3: Get to Know More about the Loan Types
There are several mortgage types that every homebuyer can choose from. If you think that neither the fixed- rate mortgage or the adjustable- rate mortgage suits you, then you might want to consider other types of loan. If you’re planning to staying and raising your family the house, then you might want to consider getting a 30- year loan term. However, if you’re only planning to move in for ten years, then getting an adjustable- rate mortgage can be a much better option. Keep in mind that ARM rates are fixed for the first few years and will then change, depending on the housing market’s economic status. Meanwhile, fixed- mortgage rate may be relatively higher than ARM, but the prices won't change until the end of your lease term. There are also other options such as jumbo loans, which are most often used to buy luxury real estates.
Tip #4: Put Your Lifestyle into Consideration
Keep in mind that when you purchase a home, you’re also going to invest in its neighborhood. So try to see if the community fits into your lifestyle. See if it’s near your workplace or if it easy to commute, check if it’s close to any schools or is near places for extracurricular activities.
Tip #5: Stick to Your Budget
Keep in mind that getting a mortgage is a financial responsibility, which means that your mortgage payment will be on top of your monthly expenses. As a homeowner, you now have a responsibility to maintain your house, save money for repair costs, and allow some budget to homeowners’ association fees. This can be a bit of a burden, especially for first- time homeowners, that’s why you need to remember to budget until you get used to it.
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