Buying Your Own Home
One of the dreams most of us have in life is to own our home one day. When you are just starting your working life or just out of the college, it still remains as a dream for a while unless you have a large down payment somehow. As you are establishing yourself in your job, you can start preparing for your home. Here is some ideas to prepare for that first home loan application in your way to owning your home.
You need to establish an employment record before you can apply for a home loan. The lenders would want to see that you have a steady job and their maximum lending depends on the level of income you have. Usually you can borrow about 3 times of your annual income. Start saving for the down payment, you will want to save around 10-20% of the value of the house you would want to buy. Keep your financial affairs, card and loan payments in order so that you can have good credit score when it comes to applying for a home loan. A good credit score will allow you to qualify for better interest rates as well as increasing the chance of successful home loan application. Start employing budgets in your life. You will need to show to lenders that you can control your expenses in line with your income and afford the monthly mortgage payments. It is a good idea to set up a direct debit for your rent and other main outgoings. Since the monthly mortgage payments would replace the rent you are paying now, it shows the lender how you would pay the mortgage every month. Keep the number of credit cards and other loans to a minimum. You do not want to look like a debt junky. Remember, all the other monthly payments that you are making will be taken into account when the time comes to calculate the borrowing levels you can afford. You will need to verify your addresses for about 3 years back. You may want to register for voters roll, this is a way the lenders can check your address easily. You would better keep some utility bills and letters coming to your address to use them as a proof of your residence.
If you are keen to get on the property ladder, you want to jump on the earliest opportunity. You do not want to find out at that time that your credit score is not good enough or you do not have enough proof of your previous addresses. By preparing in advance, you can qualify for better rates and your application can be approved faster, easier.
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