It is a happy and exciting endeavor, but buying a house for the first time can be a cumbersome process. Mind you, looking for a property is the easy part. Being able to buy it is another.
For one, you need to send out applications to mortgage lenders. And the application process differs from one lender to another.
That said, here are seven tips you can follow for a hassle-free mortgage application:
Know your credit score
Before you start managing your mortgage application, you first need to find a way to know your credit score.
Your credit score dictates how trustworthy a borrower can be in the eyes of a lender. It encapsulates your credit history through a score that lets lenders know how high the probability is of a borrower paying back a loan. It will also help lenders determine what mortgage terms you can avail of.
That's why knowing what your credit score is will help you figure out what to expect for your mortgage application.
Know how much you can afford
After you know your credit score, it's time to check your coffers and see what kind of property you can afford to buy.
Determining your budget will help you figure out how much you need for a mortgage loan. It also helps you to figure out how to be realistic when applying for a mortgage.
The more budget that you have, the less you have to ask for in your mortgage application. When you have more of a budget for a house, this lowers your loan-to-value ratio. That means that you are posing as less of a risk with lenders, so you're now a more attractive prospect or borrower to lenders.
If you have more time, try and get as much of a deposit as possible so that you'll have a higher chance of getting an acceptance for your mortgage application.
Learn about your loan options
Now that you know more about your budget, you can start looking at your loan options. When it's your first time getting a mortgage application, you might think the first seemingly best loan option is the best that you're ever going to get.
However, it's a good idea to shop around first to know what your options are, honestly. Aside from getting the loan option with the lowest interest rate, you should also figure out what type of mortgage loan suits your needs.
For example, fixed-rate mortgages are a type of mortgage loan that has an unchanging interest rate. On the other hand, an adjustable-rate mortgage will have a lower starting interest than the market rate. However, the amount of mortgage you need to pay will increase over time.
Prepare your paperwork
Now it's time for you to gather all the needed documents for your mortgage application.
First, you need to present proof of income and your bank statements. This is the information that all lenders will need to have before telling you if they're willing to offer mortgages to you.
That's why you should gather those already to make the application a lot smoother for you.
Get pre-qualified
Some real estate agents won't consider working with you unless you get yourself pre-qualified for a loan already. All you need to get through the pre-qualification process for the mortgage is to get your paperwork together and send them to your lender.
The pre-qualification can help you figure out how much you're able to get from a potential buyer. That way, you'd know how much buying power you might be able to have for a home.
Avoid applying for credit before a mortgage
Since your credit score affects your likelihood of getting a mortgage application approved, you should avoid applying for credit at least three months before sending out your application. That way, this won't affect your credit score, which will also affect your mortgage application.
Consider working with a mortgage broker
Being a first-time homebuyer can be stressful because you don't know what to expect, so you're new to the entire process. That's why it would be ideal to have someone by your side with more experience with mortgage applications.
That's where a mortgage broker can help you.
You have to find mortgage brokers in Auckland that you trust and have significant work experience. That way, you can have a higher chance of having a good working relationship with them.
With the help of a mortgage broker, you're going to be able to navigate the entire process of applying for a mortgage with ease. They'll be able to negotiate on your behalf and show you the best options that are out there for you.
At the same time, you'll be saving time and energy. That's because the mortgage broker will handle most legwork for your mortgage application.
Over to You
The tips listed above can help you have an easier time getting your mortgage application accepted.
Nonetheless, we suggest that you hire a trustworthy and reliable mortgage broker. That's because they can help you make more informed decisions in buying your first house.
