There’s nothing wrong with wanting to own your own home, but with mortgages seeming out of reach, many would-be homeowners feel that they have to skip over their dream of owning their own property. That is just not something that you have to live with. If life isn’t for reaching your goals, then we want to know the real purpose of life on this planet. You want to own your own property that your family will be able to live in for the long term, and that usually means borrowing money from someone else.
Anytime you borrow money, you are giving risk to the lender. The lender has to make sure that you are going to be able to pay back that money. So if you really want a mortgage, these are the steps that you need to make sure that you take:
First and foremost, you will want to make sure that your credit is in order. We know that every guide says this, but they usually try to water it down. We’re not going to take that stance — you just need to get your credit in line, plain and simple. If you know that you have a lot of debt, shrinking your debt as low as you can is going to make sure you get a decent mortgage. If the goal is to get any type of mortgage you can surely find that. But when you want to own a home and keep your home, you owe it to yourself to get the type of mortgage that’s going to allow you to own the house for a long time. Do you really want to go with an adjustable rate mortgage when you don’t have the income growth to support that? It’s the little things like this that can really make the difference when it’s time for a mortgage.
Also, you might want to scale back the total price of your home. It’s all about the loan to value ratio — that is, the amount that you’re trying to borrow versus the total cost of the home. Most lenders will not exceed 80% of the home’s value. This means that you will need to come up with a sizeable down payment. Lowering the cost of your home can mean having less of a down payment to come up with. Depending on where you live in the country, this can be done easily. However, if you live in an area with a high cost of living, this could be more difficult.
Don’t be afraid to look into FHA loans, which can be easier to qualify for and can help you get into a house with a higher loan to value ratio than you might otherwise. However, these loan programs are also pretty strict on debt and income ratios, so make sure that you have this area covered.
It can seem like it’s impossible to get a mortgage, but if you follow the tips in this guide you will be just fine!