• Home
  • About
  • Recommended Reading
  • Disclaimer
  • Privacy Policy
  • Advertise / Contact

Invest It Wisely

Maximizing your EV in life

  • Home
  • Growing Your Wealth
  • Small Business Solutions
  • Healthy Living
  • Miscellaneous

4 Financial Considerations to Make Before You Secure a Mortgage

By Mich

tarraced houses victorianThere is no doubting that buying a new home is incredibly exciting, but it is equally as stressful as it is exciting, if not more. You need to think about the type of home you want to buy, what city or neighborhood you want to buy in and make many other potentially difficult choices.

In addition to that, you also need to put a lot of thought into the financial aspect of getting a home and mortgage. With that in mind, this article is going to take you through 4 financial considerations that you should make before buying a house and getting a mortgage.

Set a Budget and Stick to It

Before you even look at any homes, you need to set a budget for yourself. Most cities have houses that can range from a few hundred thousand all the way up to a few million, so there is a lot of variety. As a result, it is important to consider how much you can spend on a home, and stick to that number no matter how nice or cool many of the houses you view might be.

As for what you should set your budget at, that is completely up to you. You should evaluate your needs out of a home, what neighborhood you want to live in and what amenities you want to live near. Once you know what you want and need, perform a little research and see how much you will need to spend to get all of your needs met.

Ensure You Can Afford the Recurring Cost

While most people think a lot about the down payment and the overall cost of the mortgage, those aren’t your only concerns. Every month you will have a number of bills to pay that will range from your mortgage to your utilities. There will also be yearly costs such as property tax.

So in addition to being able to afford the down payment, you also need to do some number crunching and ensure you can afford all the monthly expenses. Tools like an online amortization calculator will be able to help you identify what your mortgage payment will be every month. Of course, utility payments like water, energy and power will vary, as will your property tax.

Build Up Your Savings Beforehand

build your savings

Deciding to buy a home should not be a decision you make in a week or make on a whim. A lot of time and thought needs to go into the decision, as it is one of the biggest purchases and choices you will make in your entire life.

The reason you should take so much time before actually purchasing a home is to build up your savings. Unless you have been aggressively saving or have impeccable saving habits, you will need a couple of months to save up enough for the down payment, closing costs as well as other things you may need to buy. How much you need to save will depend entirely on how expensive your mortgage and home will be.

Improve Your Credit Score and Credit Report

While there are definitely some borrowing and loan options for those with less-than-ideal credit scores, it is definitely still better to have a high credit score. The higher your credit score and the better your credit report, the lower your interest rate will likely be. You would be shocked at how much you will save in the long run if you apply with great credit.

So if your credit score is struggling due to missed or late payments, or anything else, you should take a few months to make sure all your outstanding debts are paid and give your credit score a chance to climb. Generally, credit scores over 700 shouldn’t have much of a problem securing a mortgage, and anything over 750 and you are likely going to get the best rates possible, as that is considered an excellent score.

Related Posts Plugin for WordPress, Blogger...

Filed Under: Growing Your Wealth, Real Estate

About Mich

Mich is your typical middle class guy with a house and 2 kids minus the dog. He works in the IT industry and likes to muse about how to achieve more for less when it comes to money.

About Invest It Wisely

Invest It Wisely is about evaluating the choices that each of us face everyday. It’s about investing your time, your money, and your energy wisely, in order to achieve your goals. The end goal is maximizing your life expectation, and exploring the ways to get there.

Subscribe!

Subscribe via RSSSubscribe via EmailSubscribe via TwitterSubscribe via Facebook

Most Popular Posts

  • How to Get Fit, Feel Better, and Get Rid of Your Foggy Head: A Few Simple Steps
  • 3 Frugal Ideas for a Romantic Valentine’s Day
  • What Would You Do with a Million Dollars?
  • The Importance of Opportunity Costs, and Why They Should Not Be Ignored
  • What Do You Need to Get out of the Rat Race and Achieve Financial Freedom?

Categories

  • Avoiding Scams
  • Book Reviews
  • Crypto Trading
  • Currency Trading
  • Economics
  • Financial Freedom
  • General Reviews
  • Growing Your Wealth
  • Healthy Living
  • Insurance
  • Interviews
  • Investing
  • Investing
  • Market Analysis
  • Miscellaneous
  • Motivation
  • Opinion
  • Paying Down Debt
  • Philosophy
  • Precious Metals
  • Reader Questions
  • Real Estate
  • Relationships
  • Saving Your Money
  • Small Business Solutions
  • Stories
  • Uncategorized
  • Weekend Reading

Archives

Invest It Wisely Copyright © 2016
Creative Commons License
This work by Invest It Wisely is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License
Permissions beyond the scope of this license may be available at http://www.investitwisely.com/contact