There are many good reasons to own a home, including the ability to build equity in a property and maintain the financial stability that comes with it. If you are hoping to become a homeowner before the end of 2021, here are four steps that will pay off.
6 simple tips to secure a 1.75% mortgage rate
Secure access to The Ascent’s free guide on how to get the lowest mortgage rate on your new home purchase or refinance. Interest rates are still at several decades low, so take action today to avoid missing out.
1. Take a part-time job to top up your cash reserves
Real estate values are higher today than ever. In July, home prices rose 19.7% year over year, according to the S&P CoreLogic Case-Shiller Index.
To swing a more expensive home, you may need to top up your cash reserves to get a higher down payment. And taking on a second job on a temporary basis could be your ticket to doing just that. You can choose from many flexible sideline activities these days, so do a bit of digging to see which gig is best for you.
2. Check your credit report for errors
You may have misinformation in your credit report that is working against you. Correcting errors such as B. arrears debt that never came from you can help improve your credit score.
One of the most important factors that mortgage lenders consider when deciding whether to get a home loan is your creditworthiness. Your credit score tells you how financially responsible you are, so fixing credit reporting errors can help increase your credit score. A recent study by Consumer Reports estimates that 34% of consumers found a credit report error. So don’t assume that your credit report is accurate.
3. Fight for a raise at work
If you’ve been taking on more responsibilities at work lately, or your salary has been increased for some time, now may be a good time to sit down with your boss and talk about your salary. Not only can a raise make you more affordable for your home, but the higher your income, the more likely it is that you will qualify for the mortgage you need to purchase a home.
4. Pay off debts
Another important factor in getting a mortgage loan is your debt-to-income ratio. This ratio measures the amount of debt you have relative to your income, and the higher it is, the more it can prevent you from qualifying for a home loan.
If you are in debt, now would be a good time to try to pay off something and lower that rate. By the way, getting a part-time job or negotiating a raise at work is a great way to raise the money you need to pay off a loan or credit card balance.
Buying a home is a big undertaking in general, and it’s not an easy one this year. Because property values are so high, you may need a larger mortgage to buy a home. So it pays to do everything possible to increase your chances of getting a qualification. Not only could these steps help you become a better mortgage candidate, but they could also place you in a stronger position to deal with the many expenses associated with owning a home.