Purchasing a new house is usually very expensive. Very few people can afford to pay directly from their accounts based on income or savings alone. A majority of people usually go for mortgages to become homeowners. There are many factors, which you will have to put into consideration when you decide to get the mortgage loan. Some of the top ones are highlighted below.
Main consideration to make
Your creditworthiness is the first thing you should consider. It will determine whether you will be able to get the loan as well as the amount that you can get. If you have poor credit score, you should invest your efforts in trying to improve it before you apply for the mortgage. There are various ways of doing it such as clearing your existing loans. If you are unsure of how to go about it, you may seek advice from a bank representative.
Amount to borrow
If you are able to access a mortgage loan, the next factor to consider would be how much to borrow. The amount should be sufficient to get you the house that you desire, without exceeding by a lot. Borrowing more than you need will simply increase the amount that you will have to pay back, as interest will also be charged on the extra amount. You should thus have a budget of the amount of money you need to facilitate the purchase of your home before you walk into the bank to request for a mortgage.
Your income level
The amount of money that you earn on a regular basis should help you to determine how much to borrow. You need to ensure that you are able to repay the mortgage successfully, in accordance with the agreement that you will make with the lending institution. A monthly payment that exceeds 50% of your income, for example, is likely to be unmanageable for you. Make sure you get a loan, which you can afford to pay comfortably based on your earnings. Consider your job security as well, as you may have problems repaying your mortgage in case you lose your job.
The down payment that you pay will determine the interest and amount of regular payments that you have to make as well as the total amount of interest that you will pay. You should, therefore, try to pay the highest possible down payment.