Owning a home is an exciting and fun experience. However, the process of getting there is not an easy one. There is a long process of applying for a mortgage which requires effort and discipline. You will also have to commit to the monthly payments to avoid losing your home. And just like picking the right home is important, so is picking the right home loan. Below are a few tips on securing the right home loan.
Learning Basic Lending Rules
Lenders have their own criteria before approving a loan. However, every borrower needs to know lending requirements such as;
- Employment. A lender will want to ensure you have job security. People who have been employed for a longer time have better chances of getting a loan.
- Credit Score. Lenders will often evaluate your credit score to see your rating. Therefore, try to pay as many of your debts as possible before applying for a loan.
- Deposit size. A person that makes a larger deposit has a better chance of getting the loan. Most lenders, including banks, VA Home Loans, or government home loans, will require you to make a deposit when getting a home loan.
Have Your Document Ready
When applying for a mortgage, your lender will need some documents before processing your loan. It is good to have these documents ready, to hasten the loan application process. For instance, you may need your payslip accompanied by a bank statement. If you are in a complicated job situation, the lender will need more information. You will also need a recent W-2 and your tax returns for the last two years.
Save for a Down-Payment
The down payment will vary depending on the lender you choose. Some start from 2.25%, going up to 20% of the buying price. When you have decided to buy a home, reevaluate your monthly budget and see the amount of money you can save every month for the house. Apart from the deposit, you may also have to save up for some upfront fees, including mortgage application, legal costs, inspection fees, stamp duty, and maybe home insurance.
Mortgages are created differently. Even loans with an equal interest rate may differ in other fees, making one loan cheaper than the other. First, understand all the components that determine your mortgage price to accurately compares various offers. Also, look at the terms being offered by multiple lenders to know what you are getting into. If you need help, it is best to consult a professional in the field.
After you are done with the application process, your lender may still follow up with other requests. If they send you some paperwork to be completed, do it promptly and have the documents sent back to the lender. If you delay in responding, you are delaying the approval of your loan. Ensure you do everything possible not to be the one standing in the way of owning your dream house.
The above tips can help you make your home loan application process easier. Also, an essential factor during your loan application process is having a repayment plan, especially one that includes repaying the loan as early as possible.