Taking a mortgage is one of the most important decisions you will ever have to make. It is, therefore, essential that you consider all aspects that can affect this process, either positively or negatively. This will help you make an informed decision.
Here are some of the critical factors you should consider before applying for a mortgage loan:
A good credit score is crucial in getting approved for a mortgage. Before you look for the right mortgage lender in Portland or any other location, ensure that you have an impeccable credit rating. If your credit score took a plunge recently due to some delayed or default financial obligations, it is better to delay your mortgage plans. This will give you a chance to make the necessary financial adjustments to get your credit score in line. A good credit score will save you a lot in the long run in terms of payable interests.
Type of loan
The type of loan will have a direct impact on its repayment as the interest rate payable can vary. There are two types: fixed and variable rate mortgage. For a fixed rate mortgage, the interest remains the same for the entire repayment period. For this type of loan, you can plan for your financial obligations with accuracy. On the other hand, variable rates keep changing depending on the changes in the market. However, with a variable rate, you stand to gain when the interests rates go down. It is, therefore, important that you know the best type that suits you.
Do your income-expense analysis
Before you apply for a mortgage loan, make sure you do an honest income analysis. Evaluate all your current sources of income. Do not include the income you are expecting in the future. In addition, do a realistic review of your current and recurring expenses. This analysis will let you know how much of a loan you can afford without drowning in debts.
Buying a home is an exciting experience. It is, therefore, important, that you think objectively when applying for a mortgage. This will keep you from making hasty decisions that can be detrimental later on during the repayment period. The above factors will help you make an informed decision when taking that mortgage.