Thinking of buying a house for you or your family? Does it seem as though the process of doing so seems too complicated or otherwise very intimidating because you are unsure if you are fit for qualifications when it comes to getting a home loan? There are many things that you will to give consideration to, but it’s not impossible to manage. There are many ways to be able to obtain a home loan, and with the right knowledge, you will be able to set yourself up in a way to get the home loan that you need. There is a lot of paperwork to be sure, and you will need to have as much communication as possible when you are working with lenders or brokers.
First off, you will need a good credit score, so check it. It’s very easy to get denied for a home loan purely on the basis of a neglected credit score. It’s what tells the lender whether or not you are qualified to handle large amounts of payments, and whether or not you will be reliable and responsible. In other words, it tells them whether or not they will get their money back. Check your credit score first to see if you need to take some time to work on it, and then do so accordingly.
You will need to have documentation about your financial history. Besides the credit score, the lenders and brokers will want to take a detailed look into how you are managing your money. They will want to see W-2s and tax returns and pay stubs as proof that you have an income and that you are not avoiding taxes. They will want to see bank statements to see how much of your income you are spending on current expenditures – if you are spending too much right now, they may not want to approve a loan to you because having a high debt-to-income ratio tells them that you currently do not have the money to spend on a mortgage loan.
Go shopping with your loans. You have the power to pick and choose. You are not obligated to sign the first loan offer you get. Keep it in the back of your mind and look for other options. It’s possible that you may qualify instead for an FHA 203K home loan if you are buying a house in need of great repair, or a VA mortgage loan if you are a veteran or currently serving in the military. Speaking to a variety of lenders and brokers will give you a better picture of the industry, and that will give you some leeway to be able to bargain for a better deal.
Don’t forget about the fees and closing costs. Interest rates are not the only caveats to a home loan. Purchasing a home is tricky in the sense that you need to able to understand the fine print in your contracts. You need to understand what you are getting yourself into. Educate yourself. Your mortgage lender is the one who decides what to charge for these extra fees, so it’s up to you to stand up for yourself. Nothing is set in stone until you sign it (and even then, refinancing is tricky).
Understand your current economic situation. In other words, budget. Make sure you understand whether or not you can truly afford the price of a house, which as stated before, has a lot more needs that needs to be taken care of besides the mortgage and interest rates. Try to keep your debt-to-income ratio low, and this not only gives a lender more incentive to give you a loan offer, but it will make your own life easier in the long run.
You have help that you can reach out for. You can talk to a real estate lawyer or a housing counselor about the fine print on your paperwork, and they can help you understand the offer you are signing for. You can ask for help from the Fair Housing Association if you are either coming from a low-income background or if you have poor credit. Essentially, there is a lot of research ahead of you that you will have to make, and if you take the time to do so, you can potentially save yourself a lot of heartache and money. Don’t forget to breathe and stay calm. Take everything one day at a time and you will be able to reach that moment in harmony and confidence to be able to take further steps in securing a good mortgage.