With such a buoyant homes market at present, more first time buyers are surfacing than for many years, motivated even further by a healthier jobs market, low mortgage rates and new low down payment options. If this is you, there's a good chance that you could do with a helping hand when it comes to actually obtaining a home loan.
Today, we'd like to offer some simple tips throughout the home loan process. Obviously your individual circumstances will ultimately dictate your success, but there's no time like right now to put yourself in the best possible position to get the finance you need.
Work on your credit score - A low credit score means you're very unlikely to get a home loan. The better your score, however, the more likely it is that you will qualify for the very best rates. You therefore really need to focus on doing everything you can to improve your score. This means reducing what you owe on credit cards and paying off other debts that help formulate your score. Your debt to income ratio is going to be an essential focal point for lenders.
Get your paperwork in order - There's a long list of items you'll need to have ready when you apply for your mortgage to give lenders an accurate overview of your circumstances. These range from pay stubs, tax returns and bank statements and your social security number, through to details of any investment accounts and life insurance policies, vehicles you own and their resale value, credit card information, auto loan and personal loan details etc. Get all of these in a folder now, so there are no delays while you search for paperwork.
Make sure your home loan is truly affordable - If you click here, you'll see a range of mortgage calculators that serve as helpful tools during the home loan process. You can use these to obtain a broad illustration of what different levels of lending will require from you on a monthly basis. Lenders will not let you borrow more than they think you can afford, of course, based on the comprehensive information you provide to them, but you also need to avoid potentially over stretching yourself in future - you will know what your life plans are better than anyone, so don't compromise them by borrowing too much and having to curtail or delay them.
Select a great home loan professional - This is as important as selecting the right realtor, as you're going to need the very best advice every step of the way. You can make a great start by clicking here to make a free mortgage application via our website.
Choose the right loan type - This is a subject for an entirely separate blog, but if you click here, you'll see a nice visual demonstration of the sort of loans that are available. You may be surprised by the amount of loan types there are. Of course you won't qualify for all of them, so you need to engage with a mortgage professional to explore what are the very best options for you. Did you know, for instance, that since the end of last year qualifying buyers have been able to obtain government-backed loans with down payments as low as 3%?
Get pre-approved - Our list of tips is broadly sequential. If it were in order of importance, there's a good chance that getting pre-approved would be right at the top. If you are pre-approved for the home loan you need, sellers will have confidence in you and will take you and any offer you make with the utmost seriousness. There's nothing worse for a seller than accepting an offer that falls through because the potential buyer couldn't obtain the necessary finance. It's often the case these days that multiple offers come in for homes - if you were competing for a home without pre-approval and your purchasing "rival" had everything sorted in advance, whose offer would you go with if you were the seller?
Now the fun bit starts - You're pre-approved so now is a great time to begin your home search. Your realtor will help you to negotiate a fair offer - all being well it will be for less than the amount you are pre-approved for.
Keeping up appearances - Don't assume that because you're pre-approved that you're absolutely home and dry with getting the home loan. As you would reasonably expect, before any money changes hands lenders will recheck your employment status and credit score. Therefore don't quit your job, take out a car or similar large loan or apply for any new credit cards. Common sense is the best policy.
The finishing line's in sight - The loan becomes official when you sign all the documents to complete your purchase.
We hope these basic hints help to provide a little structure and reassurance for you. Please don't hesitate to contact us today if you have any questions at all relating to home purchase.