MORTGAGE APPLICATIONS
Unpacking the Top 5 Must- Know Tips for First-Time Homebuyers
1 . Why Your Credit Score Matters The first step on the homebuying journey is to check your credit score . Your credit score is one of the biggest determining factors in whether your home loan application will be approved by the banks . It is used to gauge your ability to repay your monthly debts , determine your risk profile and to secure the best possible interest rate on your home loan .
It ’ s easy to check a credit score online using ooba ’ s Bond Indicator - a free online prequalification tool .
Your credit score is based on several factors , including your debt repayment history , how often you ’ ve applied for credit , what kind of credit applied for , how long your various accounts have been open and how much you owe .
A credit score of at least 610 is required for a home loan application to be considered by the banks , and if your score is below this benchmark , it ’ s best to spend six to 12 months taking the necessary steps to boost it before applying again .
Clearing your credit record requires paying outstanding bills in a timely manner , closing accounts once you ’ ve paid them off and refraining from applying for additional credit during this time . It ’ s also a good idea to check your credit record for inaccuracies as these do sometimes occur .
2 . What You Can Afford Being realistic about your finances and what you can afford before starting your property search is an essential part of a rewarding homebuying experience . With interest rates remaining elevated , Be conservative when calculating your budget to ensure that you have some breathing room should rates go up again or should your financial circumstances change .
As a rule of thumb , you should ideally not be allocating more than 30 % of your salary to home loan repayments , but this figure should also consider :
• Your monthly living expenses
• The current interest rate and
• Whether or not you are applying for a joint home loan .
Real Estate Investor Magazine MAY 2024 69