Tips For First-Time Home Buyers

by: Devora Witts


Home-Ownership May Be Difficult To Achieve But Not Impossible

Lately home loan terms are not welcoming for young people who want to have their dream of owning their own home fulfilled. Due to market conditions, home loan installments have increased and salaries can not seem to keep up with the rise. Less affordable loan installments mean less new home owners. There are, however, ways for dodging this problem and securing a mortgage loan with reasonable monthly payments.

The increase on the interest rates is the main cause of the monthly installments rise. However, a good credit history can contribute to getting a lower interest rate from mortgage lenders. What you need is to reduce the risk involved for the lender in the financial transaction.

Improve Your Credit Score, Prior To Applying

You can improve your credit score by keeping up with payments, and never paying late. Also, try to cancel all the credit card balances, keep only a couple of credit cards and close unnecessary bank accounts. You can also take small personal loans in order to buy things you need and pay them off sooner. This will greatly increase your credit score. Make sure to cancel them all before applying for a home loan.

Save Enough Money For A Down Payment

If you can collect a considerable amount of money in order to make at least a 10% down payment, you can easily get a reduction on the interest rate charged for your home loan. Down payment proves the lender that you are capable of setting aside enough money, that you have an income that will let you pay for the loan and that you have enough discipline for committing to it.

Applying For A Joint Mortgage

A great way for obtaining a home loan easily is to apply for a joint mortgage. Joint mortgages are not only for families or couples. Two people can come together and apply for a joint mortgage. However, you will need to agree in written what rights and obligations will each one have over the money and the property. Otherwise, legal problems may rise in the future (seeking professional counseling is advisable).

Benefits Of Home-Ownership

It may sound as a big sacrifice but obtaining home ownership will greatly improve your chances of getting approved for finance in the future as it will increase your credit score considerably, the property will become an asset which you will be able to use as collateral in future financial operations.

Using your property as collateral will let you get a considerable reduction in the interest rate you will have to pay for money. Moreover, you will be able to get finance sooner than you think since even if you have an outstanding mortgage, you will be able to get a home equity loan based on the equity you build on your home either because you are paying off the mortgage and the debt is reduced or because the property's value will increase over the years.