If you are in the market for a new home, chances are you’ll need financing. Read here for 5 tips to get a housing loan that makes sense for you.
For most people, their home is the biggest asset they’ll ever own or invest in. Making the step to commit to a decades-long mortgage or, if they have it, hundreds of thousands of dollars of their savings is a huge deal.
For most homeowners, they will need a housing loan to be able to afford a new home.
Whether you’re looking to get your first home, settle into someplace new with your family, or start investing in real estate, buying a home is a huge commitment. If you’re not 100% sure of your financial future, it can be a scary decision.
It’s all the more frightening if you’ve never applied for a housing loan before. You may not even know if you qualify. In order to look your best when lenders look at your financial status, follow these 5 tips to get the best deal.
1. Gather Your Documents
Lenders will need to know everything you can tell them about your financial status when you walk into their office. They’ll want to know how much money you owe to whom, how your bank accounts look, and if you’ve got any credit cards that could bury you in debt.
Make sure you’ve also got a few pay stubs, your W-2 from the previous year and 2-3 years of tax returns. If your bank accounts or financial holdings are looking particularly good right now, bring them in as well to make your case for getting a great loan.
2. Start Saving Now
If you haven’t started saving, start today. In all likelihood, you’ll need to give a down payment that can range from 2% to 20% of the cost of your home.
You should start budgeting now to ensure that you can afford not only this down payment but also regular loan payments. Try massaging your direct deposit to start automatically deducting money from your account and dropping it into your savings account.
You could alternately look at applying for an FHA loan, but the terms of that type of loan may not be ideal for your budget.
3. Check Your Own Credit Score
A strong credit score puts you in a great position to get a good interest rate on your home loan. Look at one of the major credit agencies as soon as possible to see how you can easily improve your credit score before you start the process.
You are entitled to one free credit inquiry every year through Annual Credit Report. Check with them to ensure that there are no outstanding payments owed to any utilities or any loans taken out that you don’t know about. If you have a fairly common name, it’s quite possible someone with a similar name has had their poor credit marks posted to your account.
4. Compare Offers
Different lenders will surely offer you different rates. Speak to several banks. If one has almost everything you want except one item, quote another lender that has offered that one thing.
Get to know all of the fees and components associated with your repayment. There could be schedules that increase interest rates, making your once affordable payments jump beyond your budget. If you have a buyers agent, ask them to offer tips.
5. Try A Mortgage Calculator
Mortgage calculators allow you to see how much you could be paid monthly based on home prices and interest rates. They’ll give you an idea of what kinds of down payments will be required and what you can afford.
A Housing Loan Can Make Your Dream Home A Reality
Obtaining a housing loan may be easier for you than anticipated. It may require some work on your credit score or some saving, but the outcome will be worth the temporary struggle.
If you’re ready to get a home loan and move into your dream home, contact us to get started today.
