Buying a home, you need to be prepared for the future. This means, earning enough to supply the down payment, agent fees, mortgage costs, and more. Creating a financial blanket between your expenses versus your income can be one of the smartest moves that you’ll make.
Getting a preapproval for a mortgage is a big sigh of relief. As a homeowner, you’re naturally going to look for a house you can see yourself in for upcoming years. Now, these properties may be out of your budget, but who cares right? You have a high mortgage that will hold you over. This type of thinking will only bury you neck-high in high monthly payments, prolonged mortgage terms, and financial deprivation. If your income stream is average at best, look for a house that is fairly priced so you don’t run into extreme hardships in the future and possibly even end up with an eviction notice in your mail.
Your credit score will dictate how high, or low, your mortgage’s interest rate will be. Having a higher score will obviously give you a better rate, but if you’ve had trouble with raising your credit in the past, you’re stuck with several options. The first option, you can go ahead and try for an approval with a lender, but will most likely end up with a high rate that will affect your monthly mortgage payments substantially. Or, you can hold off on buying a house until you see a significant improvement in your credit score.