by Integrum Mortgage
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Things To Know When Getting A Mortgage
How can you know if you are ready to purchase a home? What should you do when preparing to get a mortgage? These are among the many questions a new homeowner faces when preparing to purchase their first property. Before you consider the wide array of options for mortgages, make sure you understand your financial situation. The following actions can help you assess your situation to see if you are financially ready for a home.
Checking your credit score
If you want to be considered for the best interest rates, a high credit score is crucial. Most lenders use FICO credit scores, which are determined by the following factors:
- Payment history (35%)
- Credit usage (30%)
- Age of credit accounts (15%)
- Credit mix (10%)
- New credit inquiries (10%)
Out of these five factors, your payment history and credit usage are the most important determining factors when calculating your credit score. To keep your score high, ensure all your line of credit payments are paid and received on time, and try to use less than 30% of your credit limit. In addition, try to limit your requests for new credit as well as your “hard inquiries” – meaning applications for new credit cards, mortgages, auto loans, or other forms for new credit. An occasional hard inquiry is unlikely to cause an effect, however, frequent hard inquiries in a short amount of time may damage your credit score.
So, how can you monitor your credit score without damaging it? A good way to do so is by using credit monitoring services like Borrowell Equifax: websites that track and update your credit score each month. These services are usually free, easy to use, and are considered as “soft inquiries.” Whether preparing to purchase a home or simply browsing through real estate listings, credit monitoring services can help you assess your current financial standing.
Budgeting To Your Income
When purchasing a home, you should have in mind a price range that you can afford. Based on your income and savings, each person has a different budget. However, not only do you need to have a clear budget in mind, but you also need to prove to the lender that you can afford the amount you are applying for. Lenders and brokers often use the following information to assess your monthly housing costs and total debt load:
- your income (before taxes)
- your expenses (including utilities and living costs)
- the amount you’re borrowing
- your debts
- your credit report and score
- the amortization period
With all this information, lenders will assess if you can afford the mortgage you are applying for. Make sure your total housing costs do not exceed 39% of your gross household income. Although you may still qualify for a mortgage if you exceed the 39% threshold, you are putting yourself at more risk by taking on more debt you can afford.
Integrum Mortgage is ready to help you find the best rates for your ideal home. Taking your unique financial situation into consideration, our team of experts are dedicated to providing you with reliable advice. Simply book an appointment with any of our specialists and we will be here to assist you with mortgage applications!

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