Choosing to own your home is a good thing, in fact, it is a great investment you will never regret. Deciding to do mortgage versus rent is a big milestone yet will be worth the time. Therefore, it is important while considering the idea to look into all the areas of preparing yourself for the task. Just like anything else, preparation leads to success. When it comes to owning your home, it is indeed crucial to online some points that can help you prepare as well as to be qualified for it.
One major point to understanding mortgage rates and the factors they play in determining if you are qualified. Mortgage rates are based on your FICO credit score in order to determine your eligibility. Most likely, if your FICO credit score is higher, your mortgage rate will be lower. You will indeed get the best range of mortgage rates if your score is at least over 760. You are probably wondering what if your score is lower? Well, your lowest score will have to be at least 620 but this will put you at a rate of 5.022% unlike if your score were at 760 or above, you would benefit a rate of 3.433%. Therefore, before going into the whole mortgage rate lane, make sure you can fix your credit over a period of time so that you can at least fall within the FICO range of 700 and above.
The next crucial point is the employment factor. No lender wants to know that you are unemployed. After all, their main question will be if you will ever have enough money to pay up your mortgage every month. If you are not financially stable, it is perturbing enough for you and lenders wouldn’t want to consider you as a candidate for mortgage rates in the first place. Moreover, it only makes sense for you as the “payee” of the mortgage rates to want to be employed. Having a mortgage can become daunting especially if you don’t have the funds to cover it monthly. Do yourself a favor and find a job and stay on it longer than a year at least and save up money that you can use toward your mortgage. It will also help you get a lower mortgage rate if you would have cleared up your bad credit score, have enough income and then be able to pay a minimum of 5% on your down payment.
The inclusion of down payment leads me to my next point about thinking deep into how much you can afford to pay into your down payment. The way mortgage rates work is that, if you can pay at least a 20% minimum of your total home amount, then you will get the most affordable and best mortgage rates. It can be a lot of money in one setting, and that is why it is so necessary to save towards this. After all, you don’t want to be paying a high-interest rate, which comes when you pay 5% down payment or less. Try to compare mortgage rates and insert the down payments you may have in mind here.