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How To Qualify For A Home Mortgage Loan
Are you considering applying for a mortgage loan to purchase your first home? If so, you should read the following tips below that will make the process easier!
If You Have a Good Credit History It Is Easier To Qualify For a Mortgage
By far the easiest way to qualify for a home mortgage loan is by establishing a good credit history. To establish a good credit history you need to be able to demonstrate responsible repayment of smaller loans, such as credit cards and car loans. The building of your credit history begins the day that you put the very first debt into your own name. For many Americans, this is at the age of eighteen.
Have a good solid credit history, shows the home mortgage lender that you take financial responsibility seriously. This makes you, what the lender terms, a low risk borrower. That is to say that you as a borrowers are a relatively low risk in comparison to other borrowers.
In return for your good credit history, the lender will approve your home mortgage loan application. In addition, he will offer you a lower interest rate on the loan than would be offered to other borrowers who are classified as high risk.
However, if your credit history is not as strong as you would like, that doesn't mean that you will have to give up on getting a home mortgage loan. There are other things that you can do to increase your chances for mortgage approval.
Save a Sizeable Down Payment
Having a substantial down payment on the home that you wish to purchase and applying for a smaller home mortgage loan is another way to increase your chances of getting mortgage approval. Again, this goes back to the risk involved to the lender for financing your loan.
Many mortgage lenders will require that you have a 20% down payment on the home, and then they will grant mortgage loan approval for the remaining 80% of the purchase cost. This helps to offset the lender risk. In the event that you are unable to keep up with monthly mortgage payments and you default on the loan, the lender will have a better chance of recovering his money through foreclosing on and selling the home if the loan is a smaller percentage of the market value of the home.
Therefore, if you can save 30% or more towards a down payment on your home, you will be lowering the risk to the lender and increasing your chances of getting mortgage approval.
You May Have To Accept a Higher Interest Rate on Your Mortgage Loan
If you wish to secure a mortgage despite your bad credit history, and you do not have a sizeable down payment saved up, you may have to agree to a mortgage at a higher interest rate than that which is being offered to low risk borrowers. This is because the lender will want to be compensated for his increased risk level.
This should not necessarily prevent you from taking the loan, though. If you secure the mortgage and are diligent about making timely payments, after paying on it for awhile you will improve your credit history. Then you can refinance the mortgage at a later date with a better rate offer.
Beware of mortgage refinance ripoffs Examiner.com - 13 hours ago YOU CAN SELECT ANY TITLE COMPANY YOU WANT FOR YOUR REFINANCE. Title fees vary from title company to title company – call several and ask about their fees. ...
Cardoza proposal could aid housing crisis Stockton Record, CA - 18 hours ago Under the Cardoza plan, the payment on that mortgage refinanced to 4 percent fixed rate would drop to $1194 a month. Contact reporter Bruce Spence at (209) ...
More hoops to jump through for enticing mortgages Reuters - 3 hours ago By Lynn Adler - Analysis NEW YORK (Reuters) - Consumers rushing to refinance a home loan or get a new one to take advantage of the lowest US mortgage rates ...
Washington Post Real Estate editor and columnist Washington Post, United States - 8 hours ago Should my husband and I refinance our mortgage? We have a 30-year fixed rate mortgage with Wells Fargo. We also have childcare expenses that are absolutely ...
Prepaying Mortgage May Not Trump Investing Wall Street Journal - 8 hours ago McBride says once you reach that threshold you could refinance the conventional mortgage for potentially a much lower rate. Another time to prepay is if ...
