Guest post from Shane Parker of MortgageFit.
Everyone nurtures the dream of buying a home and being a real estate owner. Some buy and some step back as they lack funds with which they can buy their home. Buying a home is perhaps the biggest purchase that you have to make in your lifetime as the amount involved is a huge one. Although there are mortgage loans that you can take out in order to realize your dream of being a real estate owner, there are some who don’t qualify for such loans due to inability to make the monthly payments and lack of good credit score. Are you too wondering about the possibilities of getting a mortgage loan? If answered yes, check out the tips that can help you grab the best mortgage loan in the market.
- Try and improve your credit score: Are you about to take out a mortgage loan without evaluating your credit score? If yes, stop there and make sure that a bad credit score can get you a mortgage loan that is way beyond your means. A mortgage lender will first check your credit score and then think of lending you a loan amount. The better your credit score, the better will be the rate that you’ll be offered and with a lower interest rate. If you have a bad credit score that is below 700, the lender will know that you haven’t been good at managing your finances and your liabilities. In order to reduce their risk, they will charge you high interest rates.
- Lower your DTI ratio: Another ratio that you need to check apart from your credit score is your DTI ratio. This is the ratio between the debt obligations that you have and the income that you earn in a month. If you have a high DTI ratio, the lender will know that you might default on the mortgage payments as you have too many liabilities to meet in a month. But if you can pay off your debt and lower the DTI ratio, you can easily grab a mortgage within your means.
- Save enough money for the required down payment: When you take out a home mortgage loan, you have to save enough money for the down payment. Generally, most lenders will ask for a down payment of at least 20% of the loan amount and if you fail to pay this amount, you’ll have to pay the PMIs or the Private Mortgage Insurance payments. These payments will increase the monthly installments and therefore it is certainly better to save money for the down payment.
Therefore, when you’re about to take out a mortgage loan to buy a real estate property, make sure you follow the above mentioned points. Manage your money so as to be able to make timely payments on the loan so that you don’t risk losing your home to a foreclosure.
If you’re interested in browsing listings of Palm Springs homes for sale, click here.
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