They say that you never truly know what “adulting” means until you finally have to sign post-dated checks for the next 10 to 15 years. You may ask what you will be paying for the next decade and into the next? A house maybe? Home mortgages usually last a decade or so, depending on the terms of the loan and the amount you can pay monthly. If you can pay more, then the term can be shortened. But if you can pay only $1,200 a month, you’ll have to pay for the loan for the next 15 to 20 years.
You have to find a mortgage lender in Seattle or other cities that will discuss with you in great detail the terms and conditions of the loan. If you ever need just one piece of advice on whether to apply for a loan, it’s that you should ask as many questions as possible. Never make it easy for the lender to hoodwink you into paying them a higher interest rate than you’re supposed to. Ask questions. Enquire from other lenders. Think about your decision a million times before you dive into it. What are the other signs that you’re finally ready to own a home?
You Have a Stable Income
Many people think that applying for a loan is all about having money in the bank account. What creditors want to see is not how much you can save, but how much you earn regularly. Do you have a stable job? Does your job pay you enough? How many years have you been in this job? Is it a stable company? If it is, how stable is your position? If you have been enjoying a stable income for quite some time now, you can start thinking about applying for a home loan.
You Have Money for the Down Payment
Many property lenders are only willing to lend you around 80% of the total amount of the property. The rest of the 20%? That has to come from your pockets. Yes, you can borrow that 20% from another lender, but that is not a good signal to start your loan on. You should at least have money for the down payment. It shows that you can save enough if you really need or want something.
The Federal Housing Administration (FHA) 203(k) loans require a 3.5% down payment. Conventional loans want you to shoulder the first 20% to 30% of the property’s amount. Jumbo loans expect you to make a down payment of 15% to 30% of the property’s value.
You Have Good Credit History
If you have a score of 640 on your credit history, you will likely be approved for a loan with a reduced interest rate. But if your credit score is on the lower end of the spectrum, you might want to rethink about applying for a home mortgage. The most important thing that creditors will look into is your credit history. How good is your credit score? Have you missed payments in the past 12 months?
You Can Afford the Monthly Payments
Financial experts advise that your mortgage payments should not be more than 20% of your income. In reality, it will likely be around 30% of your monthly income. That is still okay. There’s no reason for you to panic. If you can still live comfortably while setting aside 30% of your income for mortgage payments, then you’re ready to make the dive.
Take a long hard look at your financial situation. It is always a good idea to own a home, but you need to be prepared for it. And not just for the foreseeable future, but for a long, long time.