3 Signs You're Not Ready to Get a Mortgage

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Think you're all set for a home loan? If these things apply to you, think again.

There are plenty of benefits to owning a home. For one thing, you get to call the shots rather than have to answer to a landlord. Want a dog? That's your decision. Want to put up a wall to subdivide your living room? Go for it.

Homeownership can also lead to more financial stability. When you take out a mortgage, your monthly payment can't go up. A landlord, on the other hand, can raise your rent the moment your lease expires.

But homeownership is also a huge responsibility, so you'll need to be ready for it. You'll also need to make sure you're in a good position to get approved for a mortgage. And if any of the following things apply to you, it's a sign that you may want to put off that mortgage application and get your finances in order first.

1. You don't know your credit score

The minimum credit score you'll need for a conventional mortgage is 620, though some lenders require a higher number. And if you want to snag a great interest rate on your mortgage, you'll generally need a score in the 700s or above. But if you have no idea what your credit score looks like, you won't know whether you're in the right position to apply for a mortgage. And it might be a sign that you're not keeping tabs on your finances in general. In that case, you may want to delay homeownership until you have a better understanding of your financial situation.

2. You have a lot of existing debt

Taking out a mortgage means taking on a debt payment you'll need to make good on every month. Now to be clear, it's a healthy type of debt payment. But if you already have a lot of debt, that additional payment could put you over the edge. If you're loaded with debt, you may want to consider waiting to buy a home until you can pay some of it off. That way, you'll be less likely to fall behind on your mortgage -- and put your new home at risk in the process.

3. You have no idea how much house you can afford

One of the first things you'll be asked when you apply for a mortgage is how much of a loan you're looking for. But if you have no idea how much house you can afford, you won't be able to answer that question. You can always use a mortgage calculator to crunch some numbers and see what your monthly payments might look like based on different loan amounts. But just as not knowing your credit score is a sign that your finances may need an overhaul, not having any idea how much of a loan you can afford points to a similar issue.

Applying for a mortgage before you're ready could put you in a tough spot financially. Rather than run that risk, take the time to clean up your finances, pay off some debt, and figure out how much you can afford to spend on a home while keeping up with your other bills. Crossing off the right boxes before applying for a mortgage will help you approach homeownership from a more financially sound place, and that alone could spare you a world of stress in the course of paying off that property.

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