Are you ready to give up apartment living and buy your own property? Perhaps you have a great idea for a business and want to purchase a building to house the operation. With either situation, it pays to determine if now is the right time. Before you approach a mortgage broker and start looking for the right lender, consider where you stand on these four fronts. If you’re happy with what you offer right now, move forward with your plans.
The Responsibilities That Come With Property Ownership
Owning property is about more than managing a mortgage. You will also need to factor property taxes into the budget. There’s also the need to purchase and maintain homeowners insurance. If it’s commercial property, you will need various types of business coverage, including liability insurance.
Don’t forget the upkeep. There will be landscaping to manage, painting to be done, and a lot of cleaning. If something breaks down, there will be no calling the landlord; you’ll have to repair or replace it yourself. If all of this doesn’t sound overwhelming, you may be ready to own property.
Having Money for a Down Payment
Many lenders will expect you to have a reasonable amount of money set aside for a down payment on the property. It’s to your advantage to have at least 20% of the purchase price in cash. Why? Lenders like to know that if you should default on the mortgage loan, they have a good chance of selling the property and recouping their loss.
The larger down payment minimizes risk to the lender. As a result, you may be able to command better rates and terms that you would receive otherwise. You may also find it easier to pay off the mortgage ahead of schedule, something that will also save money in the long run.
The Condition of Your Credit
When was the last time you checked your credit reports? You can bet that any mortgage lender will check at least one of them. The problem is that you won’t know which one or how many the lender does check. It’s best to know what’s in them first.
Order copies of all your credit reports and go over them carefully. If there’s anything that outdated or on your reports in error, get those details straightened out before you apply for a mortgage. Correcting mistakes can often increase your score by a few points and increase the odds of being approved.
Finding the Right Mortgage Lender
Before actually submitting an application, it pays to spend some time researching lenders. Whether it’s for a home or for a business site, it helps to find out more about commercial mortgages or residential mortgages and how they work. It won’t take long to identify who doesn’t charge all sorts of fees before and during the loan term, as well as who works with people with less than ideal credit.
Remember that your mortgage is something that you will live with for a long time. Make sure you’re ready to take on this type of obligation and manage it responsibly in the years ahead. With some time and attention to detail, you can end up with a mortgage that’s exactly what you need to purchase the property you want.