Buying a house for the first time is probably one of the most exciting milestones in a person’s life. But, it can also be quite a confusing and intimidating process – which is expected seeing as though you’ve never done it before.
A common question amongst first-time homeowners is, “When should you apply for a mortgage?” Now, the answer to this might seem pretty simple, but there are some factors that you should take into account to help your mortgage application go through smoothly.
In this article, we’ll discuss when you should apply for your mortgage and give you some tips to help you while you’re processing everything.
When is the best time of the month to apply for a mortgage?
When it comes to getting a loan for the first time, you need to understand a little bit about how mortgage lenders work on a monthly basis.
Each month, mortgage brokers have a loan target to reach, and when they draw up a loan offer, that offer is usually only valid for the month they’re in, so they have to get it signed in that month, or they’d have to write up another offer the following month.
That makes one of the best times to apply for your mortgage closer to the start of the month. During this time, you’ll notice that mortgage brokers are more likely to take the time to sit with you, possess the loan, answer calls, and answer questions. This is because they still have time to meet their monthly target.
However, if you apply for your loan at the end of the month, this is when brokers are coming to the end of their month and are trying to rally in signed loans.
So, while they’ll still be professional and helpful, they’ll need your loan closed before the end of that month for it to count towards their target.
How can you speed up the mortgage application process?
There are also ways in which you can speed up the process of getting a loan approved. However, this will depend on how complicated your loan is still.
The basic solution here is to make everything as easy as it can be for your broker to go through and process. Here are some helpful tips for speeding up the application process:
- Make sure all your documents are available at the press of a button
- Submit a complete and comprehensive application
- Provide all your details upfront
- Think of any delays there might be and work out a plan to avoid them
What should happen first: finding a house or applying for a mortgage?
So this is where things get interesting. On the one hand, you can’t purchase a house without a mortgage, and you can’t get a mortgage without being ready to buy a house.
So, what do you do first? We’d suggest starting the mortgage process before you even start looking for a house. Let us explain why. Sometimes, mortgage applications can take longer than expected, and as a result, some people have lost out on purchasing their dream home.
There are also a few other compelling reasons why you should apply for your mortgage before buying a house, like:
- You get to see how much you qualify for and what home you can afford
- You limit the risks of losing the house you really want because the mortgage is available
- Sellers will take you seriously as you’re ready to buy
When should you look at buying a house?
Owning property is usually pretty beneficial. Mark Twain once said, “By land, they aren’t making it anymore.”
This statement is getting more accurate by the day with the ever-rising world population. But to answer the question more directly, the right time to buy a house is when you can afford to.
In Australia currently, the homeowner statistics show that around 60% of Australians are homeowners and 30% are renting. These figures are relatively good, but as the prices of homes increase, the lure of renting will become more appealing.
That said, if you consider Mark Twain’s statement, the land is going to continue increasing in value the less there is; thus, making the initial investment might be worth it even if you don’t live there. This doesn’t mean you should buy a property recklessly, though.
Wait until your finances are in the right place to consistently pay off a mortgage. Having some extra funds to put down as a deposit also wouldn’t hurt. Take the time to learn the markets and wait for interest rates to drop. By doing this, you can also find a better deal and potentially get your dream home for less.
Final Thoughts
Buying a home for the first time is a big decision, one that’ll impact the result of your life either for the good or bad.
For that reason, it’s essential to know what you’re getting into. We’d suggest doing your due diligence. There are decent mortgage brokers. Get in touch with one of them and find out what an application entails. By doing this, you’ll ensure that you’re ready when the right time comes!
