WPO Image

5 Reasons You Need to Get a mortgage Before Looking for a House

What should I do first, look for the house or the mortgage

Buying a home is one of the most important economic decisions that a person makes throughout his life. The advice below will be helpful to anyone looking to buy a house, no matter if it’s an experienced buyer or a person looking to get his 1st time home buyer mortgage , so please pay careful attention to every detail in this article and follow our advice to the letter.

Advantages of looking for the mortgage before

Looking for the mortgage before knowing which home to buy has the advantage of knowing which property it is possible to acquire based on the mortgage offered by the bank.

The bank establishes a series of requirements when granting a mortgage:

  • Monthly Income. The monthly installment to be paid for the mortgage must not exceed 30% of the buyer’s monthly income.
  • Job stability. Having a permanent job serves as a guarantee to face the payment of fees.
  • Credit history. The better the profile of the future owner, the more likely it is that the bank will grant the financing. The bank also assesses whether the person has previously had a loan or credit that has been repaid in full and within the agreed terms.
  • Personal situation. The situation of the person requesting the mortgage is also usually taken into account, that is, their marital status, their age, if they have children and/or dependents, etc.
  • Other assets. The bank also values ​​the holding of other property assets, such as other homes or financial investments.

With this information, the bank determines the amount of money it can lend and helps the future owner calculate how much he could pay for a home. Therefore, having the advice of a professional is key throughout this process.

From here, the future owner has greater certainty about the capital that can be allocated to the purchase and how far he can negotiate the price of the home if necessary.

Searching for a mortgage beforehand speeds up access to financing since some steps have been taken prior to its formalization. In, addition, it allows the sale of the home to be closed in less time, something very important in the event that, for example, there are other interested parties in the property.

Looking for the house first and then the mortgage?

There are also occasions in which buyers look for housing first, rather than financing, since they are unaware of the value that a mortgage advisor can provide in choosing the property. In this case, there is a risk that once it has been decided which home to buy, when applying for the mortgage, the requirements to obtain the necessary financing for that operation are not met. It is important to keep in mind that the buyer must have savings that cover 20% of the price of the property, since banks grant financing, at most, up to 80% of the appraised value. To this amount of savings must be added between an additional 10% and 15% to cover expenses such as taxes or the notary, among others.

In the event that the bank decides not to grant the mortgage, the person may face not only the problem that the seller ends up finding another buyer for the property but also, if there’s a deposit agreement or a contract of reservation, the money previously paid could be lost. For this reason, it is essential to have a mortgage advisor who helps to carry out a preliminary analysis of the personal financial situation and provides guidance on which mortgage can be accessed to finance the desired purchase.

What do the experts advise?

Experts opt for first seeking the mortgage with the bank so that, once the economic solvency and payment capacity of the future owner is known, it is determined what financing to have. In this way, it is possible to establish a more realistic budget for a house, taking into account all the associated expenses, beyond the purchase price.

ABOUT

WPO Image

Hey, my name is Wilhelmina! I'm an executive for a designer company. I love my job but also, I love to explore different things such as traveling and the amazing food that is available in those places. I also love all aspects of fashion and beauty and lifestyle itself I also like to express myself and that's where this blog comes in. A blog is the perfect medium for me as it enables me to share with you my heart and passion....

Click to read on

Explore More

Modelogic Wilhelmina