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5 Steps to shopping for a mortgage

Not all people can afford to buy their home with cash. As such, most people will need to take out a mortgage to finance their home. When one decides that they want to buy their home through a mortgage, it is essential that they understand the process of applying for a mortgage and how they can repay the loan. So, what are some of the things one needs to know before they can apply for a mortgage? Well, you can get more information about mortgages from the website of Altrua Financial and other mortgage lenders in your locality.

Here are 5 steps you can follow when shopping for a mortgage:

1. Knowledge of your numbers

This is the first step that you have to take when applying for a mortgage. What are your income and debt ratio? This is important when the lenders want to determine how much you can borrow. Typically, your debt, including the mortgage should not be more than 43% of your total income. Regarding the numbers, your credit score will also be considered in determining your ability to repay your mortgage. You can get your own credit report before you apply for a mortgage. Be careful not to borrow or default in repayments of other debts as this can negatively affect your credit score.

2. Find a suitable lender

Once you have understood your numbers, this is the next step you have to consider. Look for a lender that can suitably offer you a mortgage at a reasonable rate. Some of the institutions that can lend you include credit unions, banks, and even online lending institutions. One of the things you can consider for this step is the interest rates the lenders will charge you. Compare the different lenders based on their interest rates and how fast they can process the mortgage for you.

3. Pre-approval

You can now apply for a mortgage pre-approval once you have selected a suitable lender. Pre-approval entails checking your credit score and assessing other documents that show your financial situation. When you are preapproved, many lenders will be ready to work with you as they can trust your financial stability. A preapproval letter is issued when you are finally pre-approved. A copy of the pre-approval letter is given to your lender by your agent; when you have found a home to buy.

4. Setting your budget

It is essential that you know the amount of money you can afford to pay as your mortgage repayments. You see, the fact that you are pre-approved of a certain amount does not mean that you will comfortably afford it. You have to do your own budget and know exactly what your financial abilities and limits are. You should consider the closing costs, your monthly HOA dues, the general upkeep of the house, and even utilities. This way, you can calculate your financial ability to repay the mortgage and other related costs.

5. Finalise the mortgage and close

Once your mortgage offer is accepted, you can have the loan process started. On average, this will take 30 days or so. The lender will keep in contact with you, the agent, as well as the escrow agent as the closing process goes on.

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