You have your eyes set on a home that you just know will be a perfect fit for your family. It has everything you need, and the asking price seems fair. However, when you talk to the mortgage company about making an offer, you discover that the payment you will have to make with the home loan is a bit higher than you can manage from month to month.
While being quoted with a set monthly payment with a mortgage proposal can be scary if it is higher than expected, this monthly payment is not always set in stone. There may be a few things you can do to lower that monthly mortgage payment so you can afford your first home.
Consider making a larger down payment.
Down payments are just part of the territory with most home loans unless you just happen to find a lender who offers zero down because you have stellar credit. The typical down payment requested with home loans is 20 percent of the asking price. However, just like everything else with a mortgage loan, these numbers are flexible, so you can make a higher down payment.
Because the down payment goes directly toward the home price, it drastically reduces how much you have to borrow and how much you will have to pay interest on down the road. Therefore, even saving a few thousand dollars more to go toward a down payment could be enough to drop your monthly payment slightly so it will be easier to afford.
Work on your credit score a little longer.
Believe it or not, your credit score has a lot to do with how much your monthly payments on a home loan will be because your credit score affects the interest rate you will be charged. If you can bring your credit score up just a bit before applying for a mortgage, you may see a somewhat lower monthly payment because interest charges will change and the amount you have to pay back will be lower.
You can usually bring up your credit score a little by paying off small debts, clearing any derogatory remarks, and establishing a healthy payment history. Even if working on your credit score means you will have to wait a little longer to get into the home you want, it can be worth it to also obtain a mortgage payment that will be more affordable from month to month. To learn more about the factors that determine your mortgage payment, reach out to a lender like Attorneys Funding Group Inc.