Making the decision to purchase a home is a significant step in anyone’s life. So before you begin shopping around for mortgages, it’s important to do some research and figure out exactly what type of home loan will be best for you. So if you’re looking to apply for a home loan in Redding, make sure you consider the financial factors discussed in this article.
- How much you can afford – One of the most important things to consider is how much you can afford, at your current income, to pay towards your monthly mortgage payment. It’s also important to remember that the monthly cost you’ll be paying needs to include property taxes, homeowners insurance, and utilities. So your estimate of what you can afford should go beyond just the mortgage payment. This is important to understand before applying for loans because you don’t want to accept a loan you cannot afford to pay every month.
- Your credit score – Before you even begin shopping around for a home loan in Redding, you should know your credit score. Your credit score will be one of the biggest determining factors in your approval of a loan and which type loan you’re eligible for. For example, people with credit scores below 600 may be eligible for FHA loans, but the FHA will sometimes make exceptions for applicants who have insufficient credit or nontraditional credit history. For more traditional mortgages, a credit score of 600 will put you at the back of the line. Your credit score is considered when calculating what mortgage rate you’ll end up with, which means it will have a direct impact on your monthly payments. Higher credit scores are awarded lower interest rates. If you give yourself enough time, you should try to get your credit score as high as possible to ensure you don’t suffer extreme interest rates.
- Types of mortgages – You should do some thorough research before applying for loans. There are multiple types of loans, including a fixed-rate mortgage, an interest-only home loan, and a hybrid mortgage. When choosing the type of home loan, you should be realistic about your financial future. With that in mind, it’s important to choose a mortgage type that won’t leave you scrambling to pay your bills every month.
- Potential lenders – You should meet with multiple lenders before signing an official mortgage application. By meeting with potential lenders, you’ll be able to ask any questions, find out about closing costs and other fees, and see what kind of loan you may qualify for. In doing this, you’ll then be able to compare information from different lenders and make an informed decision.
These factors are just a few of the many considerations you should make before applying for a home loan in Redding. By choosing a reputable lender, you’ll be able to ensure you gather all of the information you need to make an informed decision about what loan is best for you.