Posted on: 6 June 2017
If you have recently gotten married and are planning to buy your first home, this can be a daunting task. This is especially true if you do not understand the process of getting a mortgage. If this is you, below are some tips so you can get the mortgage that you need.
Know Your Credit
The first thing you should do is determine what your credit score is. You can get a free credit report once per year from the three main credit bureaus: Equifax, Experian, and TransUnion. Make sure you get all three of them so you can see your full credit history. You may think that the same information is on all three but this may not be the case.
Visit the credit bureau's website to request your credit report and have it instantly as a download. Each credit report has four sections: your identifying information, your credit history, all public inquires, and inquiries that have been made into your credit, such as if you apply for a loan or a credit card.
Look at each section closely to ensure everything is accurate. This is especially true of the credit history section. Go through each line and check the name of the creditor as well as the amount you owe or owed to them. If you paid a loan off, it should show this on your credit report. This will be under Status and will show as open, closed, paid, or inactive. It will also show the payments that you have made and if you made them on time.
These reports will not give you a FICO score but you need to know this. Most lenders, including mortgage companies, use the FICO score to determine if you are a credit risk. A low FICO would result in a higher interest rate.
If you are putting the home in both you and your partner's name, the mortgage lender can list the person with the best credit score as the main lender. This can help you get a better interest rate if you have bad rating but your partner has very good credit.
Determine Your Budget
Once you determine what your credit score is and have checked all credit reports, you need to determine how much you can spend on a monthly payment. Consider future purchases you will have to make, such as cars or loans you may have to take out for things like college.
Many lenders look at your income and will not sell you a home that is above your means but this is not always the case.
If you are not sure what you can afford, talk with a financial adviser. They will ask you to bring all your bills, what your income is, and how much money you have in savings and other accounts. As far as savings, it is a good rule of thumb to have at least six months' worth of expenses in case of an emergency.
The financial adviser will determine the amount of money you can afford for a new home. You may want to consider purchasing a home a little under what you are able to afford to give you some cushion.
Talk with the mortgage lender if you have more questions about getting a home loan.Share