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If you are purchasing a home, you will want to spend time taking a close look at your financing options. A home is a financial commitment, and unless you can afford to pay in cash, chances are you are taking out a mortgage. There are a lot of things to keep in mind when you are searching for a mortgage. There are also a few things that you need to be aware of before you choose a lender. Here are three things that you need to know.

Credit Matters

There are a lot of things that a lender will consider when it comes to their home mortgage services. Lenders will look into your income level, amount of existing debt, and your current credit when deciding if they want to approve your application and what your loan terms will be. Your credit score alone can make or break your attempt to secure a favorable mortgage. While you can obtain a mortgage without a fantastic credit score, the better your credit, the better your mortgage. A good credit score of 670 to 739 will put you in a good position if you are looking for a mortgage.

What Loan Term Works Best

When it comes to home mortgages, the most common loan terms are 15-year and 30-year. Before you take out a mortgage, you will want to consider whether a shorter term or a longer term mortgage will work best for your needs. The benefit of a shorter mortgage term, like a 15-year mortgage, is that you will pay less in interest. However, the monthly payments will be higher. With a longer term, you will have lower monthly payments, but you will pay more in interest.

What You Can Afford

Another thing that you need to know when shopping for a mortgage is that you will need to factor in more than just the mortgage payment when it comes to your budget. There are a lot of expenses associated with owning a home. Things like home insurance, property taxes, maintenance, and more make owning a home more expensive than you may realize. However, you may qualify for a bigger mortgage than you can comfortably afford. Most experts recommend only spending somewhere between 25 and 35 percent of your post-tax income on your mortgage. 

Before you take out a mortgage, there are a few things that you should consider. First, your credit score will play a significant role in your ability to obtain both a mortgage and favorable terms. If your credit score is not at least good, you may need to wait before seeking out a mortgage. Next, you will also want to weigh the pros and cons of different loan terms. Finally, make sure that you can afford your mortgage before you commit. 

Talk to an expert, like Choice Mortgage, today for more information on what to know before taking out a mortgage.