![]() Get a credit report. Contact a credit reporting bureau, like Equifax or TransUnion, for a free copy of your credit report.Collect past and present bank statements. Crunch the numbers and total your monthly debt repayments as one amount.You want to enjoy your new home, not live in a financial prison. Give yourself some room so you're not strapped for cash. If you don't have much disposable income every month, rethink your home buying strategy. It might improve your chances of getting pre-approved for a mortgage. If you can, pay off most of your outstanding debt before taking on another loan. Too much debt, particularly big balances on credit cards, is a red flag to lenders.Ī mortgage is another debt you need to pay off. Outstanding debt affects your ability to make regular mortgage payments. These costs are often overlooked but should be considered before applying for a mortgage. Also, the government requires all homeowners to pay property taxes. You need to have home insurance with the lender named on the policy. Property taxes and homeowners insurance are necessary when buying a new home. Not to mention, your housing costs increase if you have one or more dependents living at home. You also pay for household repairs and ongoing maintenance. Estimate housing costsīuying a home means extra expenses: property taxes, housing insurance, possibly mortgage insurance, heat, hydro and the list goes on. So, review these costs before applying for pre-approval. Lenders look at housing costs and outstanding debt to determine if you can afford a mortgage. A lender compares your pay stubs and electronic funds transfers to these assessments. If your income fluctuates, keep a record of your notice of assessments. ![]() Lenders don’t usually include overtime or bonuses in their final equation. This makes affording a mortgage easier. But could you still afford your mortgage if you lost one income source? Consider extra income. Will someone else help pay the housing costs today or in the future? Review all factors, like total housing costs and outstanding debt, before you decide.Īlso, keep a record of any overtime or bonuses for future reference. Some people living under the same roof combine incomes to pay bills. The annual household income is the total amount of money a household earns before taxes and deductions. Lenders consider contributing income earners as co-applicants and co-borrowers on a mortgage. Can you afford a mortgage? Here are a few things to consider.
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