When we envision a successful future, our dreams almost always tend to include a home. Each of us may differ in house preferences yet the goal remains the same—a place to call our own!
Financing is the most important aspect of the home buying process. Although your financial status is one of the many things that lenders will look more closely at, it doesn’t mean you can get a mortgage because you have a tremendous credit history and impressive assets.
Here are some factors that will be considered in your application:
The 20 percent down payment is all but dead. You can now make a down payment of 5-10 percent or apply for loans from the Federal Housing Authority that requires a 3.5 percent down payment. However, a mortgage insurance is a prerequisite for down payments of less than 20 percent.
Banks and lenders are also concerned about whether you can keep up with your mortgage payments. This means your job history will be vetted carefully.
Lenders will want to know that you’re earning enough to handle all of your bills, not just your mortgage payments. So all of your debts, including credit-card balances and student loans, will be weighed against your total household income. Avoid applying for new credit during the three to six months prior to securing for a mortgage.
Credit scores signify your trustworthiness to financial institutions and can determine how easy, or how expensive, it is for you to get a mortgage. To determine your ability to pay, lenders look at your score and they prefer you to have good or excellent credit. 750 to 850 score is considered excellent; 700 to 749 is considered good; a 650 to 699 is fair; and 300 to 649 is poor.
Buying a home requires a lot of financial responsibility. It is a complicated process and a trusted realtor is the best person to protect you through the whole transaction.