Lending and Borrowing: 5 Key Areas to Watch
In the vast majority of cases, people need to take advantage of mortgages and/or other forms of financing in order to buy their home. Since, for most of us, the value of our home represents our single largest financial asset, wouldn’t it help to proceed in a more prepared and knowledgeable way to make the process simpler and easier? and much less stressful? One of the key factors, which affects the procedure of obtaining the necessary and necessary funds, is to ensure that you optimize your creditworthiness, to the best of your ability. With that in mind, this article will attempt to consider, examine, review, and discuss 5 key areas of consideration that could make your search simpler and easier.
one. Credit cards: How you have handled your credit cards, from a financial responsibility perspective, has a big impact on whether you will be able to obtain the necessary financing to purchase this property. Lenders typically use specific parameters, including ratios of your overall income to debt ratios. They have one that limits the amount of the mortgage they can grant and another that weighs one’s total debt. In addition, the quality and level of your credit rating is a relevant factor that indicates how you have previously handled debt. It’s wise to avoid any new debt, in the period leading up to applying for a mortgage, and pay off your existing obligations to the best of your ability!
two. Other loans: Other loans to consider and address include auto/car, unsecured, and other types of loans. When possible, reducing the total amounts you owe makes getting a mortgage easier and more possible!
3. Credit lines: Do you have any lines of credit, either existing debts or simply available to use? It’s wise to cut down on as many of these as possible in advance!
Four. Debt Management: How one has handled past debt is an important factor when it comes to financing a home purchase. While you can’t change the past, it’s often wise to take some time and address these, before moving on, to search for that dream home!
5. Know and protect your Credit: Several months before you start your search, get a copy of your credit report. Please review this document, carefully and thoroughly, and make sure there are no errors, etc. Also, find out your current credit score and discuss it with a recommended professional mortgage banker/broker and/or credit repair specialist for their recommendations, suggestions and ideas. Understand, the quality of your credit often becomes your best friend, or it can haunt you for a considerable period of time!
Prepare yourself and proceed accordingly! The more you know and understand, and your willingness to proceed with a high degree of personal financial discipline and responsible behavior, the better off you are!