Financial preparation is not as easy as it seems. A lot of people think that they are prepared financially but they are actually not. In the worst situation, they realized only after their home loan being rejected.
Affordability It is hard to estimate how much we can apply for loan but there are always methods to figure out the amount we should apply for Try to multiply your yearly income by 2.5. The total amount you get is still under your range of affordability. Hence, anything more than that is not advisable as your will likely to end up in debts.
Start Saving How else can we ensure that the loan will be approved by the bank? There are two things that can be done. First, increase your income so that the total income per year x 2.5 will increase.Second, save more and pay for higher down payment which i will help in decreasing the amount of the loan.
Improve Credit Score In applying any kind of loan or mortgage the lender which in this case is the banj, will check our background before handing the money. Checking our background meaning they will look into our credit score to determine whether to approve the loan or not. Credit score is a mechanism used by lenders to check on creditworthiness of the borrower. Paying off all debts that you have can greatly help in improving your credit score. Having better credit score means that you will have higher possibility to get the bank’s trust, hence, a higher chance to get the loan approved.
So, basically, the preparation and process in acquiring a home is not as simple as we expected it to be. A lot of research needs to be done in order to avoid making arbitrary decisions. It will take a great deal of time, effort as well as energy before you can purchase any house.
Source: Star Property, July, 2019 ( 5 Steps to getting your finances in order to buy a property )