Are you amongst those prospective buyers who dream of buying a house? If yes, then what is stopping you from fulfilling it? Probably, you might not have sufficient money to make the big purchase and this is why, you delay your plan. In such situations, taking out a mortgage loan can make things easy for you. However, the process of obtaining a home loan differs much from renting an apartment or getting a car loan. Read on to know 4 tips that will help buyers get home loan approval.
- Assess your finances carefully – Before you think of buying a house, it is important to check your credit and save enough for the down payment. This way, you can qualify for better interest rate and avoid the costly fees on the loan. Make sure you check if there are any errors on the credit reports and know your FICO score. You need to have a credit score of 740 or more in order to get the best rate on the home loan. If you are having bad credit rating, pay off your credit card debts to improve the score. By making 20% down payment, you actually avoid costly private mortgage insurance to beat other competitive offers.
- Find other options to obtain loan – Apart from mortgage, other options include FHA loans, military loans and foreclosure loans that can be obtained easily for a home buyer. It is quite difficult to take out conventional loan even if you have good score. This is because they require you to make the full 20% down payment on your mortgage. However, the alternative loan packages are helpful for buyers in two ways. They usually require making low down payment than conventional ones and have higher debt-to-income ratio.
- Improve your credit score for better rate – Finding it difficult to obtain mortgage loan due to poor credit? Well, it is advised to repair your score by paying off outstanding dues as soon as possible. The lower the utilization rate, the higher your credit score will be. The first-time homebuyers usually have good credit however, repairing poor credit will definitely require time. It is suggested to start with the repair process at least 6 months before you think of purchasing a home. This will help you manage things in a better way and get loan at lower interest rate.
- Look for a cosigner when obtaining a loan – If you have bad credit history, insecure job, short sale or foreclosure in the past, it is important to find a co-signer for loan approval. Your co-signer is the person who is willing the lender to repay the loan in case you turn out to be a defaulter. While a co-signer gives you the strength to take out a mortgage, he should be someone who is willing to be a part of the deal and is approved by the lender. Your co-signer must have strong credit history, good income and at least 18 years when you take out a loan.
You may talk to the estate agents in se17,
before making a home purchase. This will enable you to know more about the property and if it is the right one for your need.