Getting a Mortgage Loan in 2023: 4 Things You Need to be Aware Of
Suppose you have decided to embark on the process of getting a mortgage loan in 2023. In that case, you must ensure you are equipped with as much information as possible to avoid several common pitfalls and streamline the entire journey from start to finish. It can be increasingly difficult to know where to begin, especially with interest rates fluctuating at a seemingly unstoppable pace, but by doing your homework, you can proceed with caution and be confident in your ability to make the right decision. To find out what you need to be aware of whilst getting a mortgage loan in 2023, continue reading.
Getting a Mortgage Loan in 2023
You Must Have a Big Deposit Saved
In 2023, and any year for that matter, you must have a big deposit saved if your mortgage loan application is approved and you are to become a first-time buyer successfully. It might sound like a financially daunting and time-consuming task, but if you have been slowly contributing to your deposit fund over the years, you will be surprised at how quickly it can accumulate, especially if you have automated your savings. This has, unfortunately, become increasingly difficult over the years, and with house prices reaching record highs in 2021, the housing market is unlikely to recover before the end of 2023. It can also be difficult to determine how much of a deposit you need to save with the final figure entirely dependent on the type of property you intend to purchase and the geographical location you wish to relocate to but if you have done your homework and come to a rough ballpark figure, more is more when it comes to applying for a mortgage loan with the more you save, the less your monthly repayments will be.
Your Credit Score Will Be Assessed
If you decide to apply for a mortgage loan this year, you must know your credit score will be assessed. In the simplest of terms, it is a numerical assessment of your creditworthiness, with a lower credit score usually indicative of poor spending habits in the past and a higher credit score usually indicative of good money management. This will be done by a lender and will take the form of either a soft inquiry or hard inquiry, with the latter usually the preferred option when it comes to applying for a mortgage loan. If you tend to ignore your credit score or know it has seen better days, you must take action before applying for a mortgage loan with the act of performing a hard inquiry alone enough to impact your credit score for up to 24 months negatively. To do so, pay any credit card balances strategically, register to vote, check your credit report regularly and correct any mistakes promptly, and repay any loans both in full and on time.
You Should Conduct Local Market Research
It can be tempting to rely on the expert advice and guidance of a Realtor to inform you of any local market fluctuations, movements, or trends, but by conducting local market research beforehand, you can gain a basic understanding of what you can expect when you begin the search for your next property regardless of whether it will be your first or your forever home. This may, for example, reveal that whilst house prices in your ideal postcode are soaring, expanding your search radius by as little as half a mile may be able to expose you to your perfect home that you would have otherwise remained blissfully unaware of if you had been stubborn and stuck to your guns. Suppose you are confident that you have saved a big deposit and have taken the time to perfect your credit score. In that case, this step can be completed before you have even submitted a mortgage loan application to provide you with a much-needed competitive edge in such a cut-throat market.
Mortgage Rates Are Likely to Rise
In 2021, mortgage rates remained consistently low across the board but with nowhere to go but up, first-time buyers must be prepared for hiked mortgage rates in 2023. It may, however, reassure you to know that lenders tend to generally increase mortgage rates based on low loan-to-value deals before they increase the cost of low-deposit deals that are more expensive. This means that even if mortgage rates do rise this year, they may still be lower than they were during the past decade.
If you have your sights set on getting a mortgage loan and becoming a first-time buyer in 2023, you need to know that you must have a big deposit saved, your credit score will be assessed, you should conduct local market research, and mortgage rates are likely to rise.