Everybody dreams of owning a home, but not everyone can afford it. No matter what others might say, money matters—a lot—when it comes to buying a house. So how can you tell if you are financially capable of a mortgage plan? Here’s what we think. Read on.
You have a stable source of income
Your money source is one of the first things mortgage companies assess before providing approval. You must manifest that it is stable enough to cover your monthly payments. Otherwise, your mortgage application may be denied.
You need to understand that, first and foremost, the kind of career you are pursuing and the industry you are in will further define if you are in a sound financial position to buy a home. If you have a great, high-paying job but your industry is unstable, an independent financial advisor mortgage expert would not encourage you to push through. Looking at all the aspects of your financial capacity is the expertise of these financial planners. And they provide independent advice specific to you and your established goals.
As your source of income, whatever job or business you are in needs to show some strength and staying power, at least for the entire time you will be dealing with repayments.
You have sufficient savings and emergency funds
Another critical factor that can show you are ready to own a house is the size of your savings. You must readily have a security blanket that can cover you in case something unforeseen happens, which may decrease your ability to keep up with your payment schedule.
You are debt-free
A mortgage is indeed a substantial financial obligation. To keep up with it, you may have to give up your other debts. It would be terrifying to worry about a couple of different things at the same time, so better check if your debt slate is clean before moving ahead with your plans of acquiring a property. People who get buried deep in debt are those who unmindfully accept one after the other, unsure whether they still can afford the repayment or not.
The amount of money you have, the amount you can still earn, and the amount you have set aside are very important precursors to show your capacity to take out a mortgage loan.
It is, of course, best if you can pay the entire contract price in cash. But if you will have to endure the monthly payments, make sure that you have enough money in the bank not just to pay for the down payment but to cover at least six months’ worth of repayment.
A mortgage is an obligation you cannot just set aside. Your dream home could vanish like a wisp of smoke if you do. So before taking the plunge, talk to a reliable financial planner who can show an accurate picture of your capacity to pay. It is always helpful to have some expert advice on one of the most significant financial decisions you would make in this life.
