Looking to buy a new home? Do you have sufficient funds available? If not, you may require a mortgage facility or you can prefer Berkeley luxury apartments for rent. But getting a mortgage is not as easy as it sounds.
There are several complexities and process challenges involved that you need to consider. In this blog, we will focus on discussing and identifying in detail the mortgage process and how you can apply & get a mortgage for your home.
What is Meant By Mortgage?
A mortgage can be defined as a loan that you get against your home or property. It finances the purchase of your home and allows you to get your hands on your dream home. It is considered to be better than any other loan option because the property itself is collateral in such a mortgage. Hence, providing relief to you in respect to having another collateral source.
Further, the total mortgage amount along with interest is broken down into monthly instalments, which you can pay over the predefined period. Along with such, it also offers certain key benefits such as tax savings and even mortgage insurance. Now you must be curious to know, how you can apply for such a mortgage and what the key factors to consider while applying for a mortgage.
How To Get A Mortgage?
Strong Credit Score
While looking for a mortgage there is a need for you to have a strong credit score. Depending on your credit score, your credibility is being decided by the lender. If you are looking for an estimate, then we must recommend that an individual with a credit score of 850+ can get the best interest rate or deal. Further, you must have at least a credit score of 500 to be eligible for a mortgage.
You can adopt certain key practices to ensure that you have a strong credit score when required. Such includes; paying your bills and EMIs on time, keeping your older account open, ensure that you are not using more than 30% of your allowed credit limit. Also, you must have a check on your credit reports and should report for any discrepancies.
Consider Your your debt-to-income ratio (DTI)
Further, a key statistic that lenders are interested to know is your DTI. It is a simple indication of how much debt you have currently and what is your income in comparison to that debt. Let’s take a small example to understand the situation.
Let’s assume you have taken loans for your car or any other equipment, and to a total you pay a monthly EMI of $5000, and your monthly income is $25000 then your DTI is 20%. It means that you only have $20,000 in your hand every month for further spending. Hence, based on such an amount the lenders will calculate the maximum fund they can offer to you. Also, such a ratio often impacts the actual fund requirements.
Ensure A Sufficient Downpayment
To ensure that the mortgage lender easily approves your loan, you must prefer making a downpayment. 20% downpayment is considered to be an ideal option that can help you get easy loans and a better interest rate. Apart from such, it can also be helpful to you, as paying for a downpayment will also result in reducing your financial burden or repayment risks. Further, it is always better to look for the available policies or offers before deciding on the downpayment amount.
Evaluate the Type of Mortgages
With an increase in demand for mortgages, financial institutions have introduced several types of mortgages. Each has its benefits and challenges but can be suitable for one or another. There are certain mortgage options offered by the government under the public welfare schemes. Also, there are mortgage options offered as fixed-rate or adjustable-rate loans.
You need to compare the features and benefits offered under each mortgage type and select a suitable one accordingly.
Get Pre-Qualified & Pre-Approved For the Selected Type of Mortgage
Further to ensure a step forward in your mortgage journey, you must consider the option of being pre-qualified as well as pre-approved for the mortgage. Let’s discuss what it means.
- If you just want to know about the mortgage, then you may prefer interacting with the agents at the financial institutions to get to know about the relevant documents. Also, can help you know whether you are eligible for a mortgage or not. At this stage, no official document verification is done, and verbal interaction is done which helps you understand your credibility.
- If you are serious about the mortgage option, then you can prefer filing for the mortgage under a different scheme and institution to get to know about your form approval. Also, through such an approach you can know about the deals or interest benefits offered by different lenders.
Pick A Mortgage Lender & Apply For it
Based on your self-evaluation of the mortgage types, benefits and interest associated, you can finalize a mortgage plan to fund your housing dream. During the pre-approval stage, you must have applied to several financial institutions. Hence, now you can better categorise which lender is best for you. Accordingly, you can proceed with the mortgage application and can close the deal.
Buy Your Home
So what else are you waiting for? Get your loan sanctioned and close your deal with the real estate developer/agent.
However, it can be recommended that rather than being involved in such complexities of mortgages and loans, you prefer looking for Berkeley luxury apartments for rent. You can get all the required facilities and amenities that are looking for while looking for rental apartments at Raj Properties. We are a leading and trusted real-estate platform, offering comfortable and affordable rental solutions to individuals. So check out the properties listed on our platform today.