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Shopping for your first home is an exciting and glorious moment in your life. Nevertheless, it’s also confusing and stressful. Are you truly prepared to purchase your first home? Do you know if you have satisfactory credit and credit score? Do you have the down payment and closing cost fees?
The truth is buying a house can be a complicating and time consuming experience. Educate yourself first, before deciding to by a home.
Qualifying for a home loan
When applying for a home loan, lenders look at a variety of factors before deciding your qualifications. Such as:
- Employment history and how long you have been at your current job. Most lenders are very strict when it comes to employment. Most lenders prefer buyers whom have steady employment history and at the least, two years at their current position. Employment plays an enormous factor in determining your ability to pay your mortgage. Lenders also use your employment to determine how much they are willing to lend to you.
- Credit history and/or FICO Score. With your permission, lenders will request a copy of your credit report from the three major credit bureaus. Your credit is probably the most important factor to lenders. Lenders will view your credit to determine which loan programs you are qualify for.
- Your credit report will let lenders know how responsible you are with paying your debts. They will view your credit report for unpaid collections and past due accounts. If your credit report list unpaid collection or past due accounts, your lender will request for you to pay the accounts or deny your request for a home loan. Some lenders determine the loan programs you qualify for based on your FICO score. Normally, they will request your score from each of the credit bureaus. Based on the three scores, either the highest of the three or the medium of the three will be used to determine your eligibility.
- Current Debt. Most lenders will view your current debt as a negative. If you have a significant amount of debt, you will likely qualify for a reduced loan amount. Most lenders prefer your debt to be less than 30% of your income, including your mortgage.
It is important to remember every lender is different. You may not meet all factors and some you may out shine than others. Research lenders in your area and find a lender whom you feel will meet your needs. You should always verify the reputation of a lender before choosing one. There are lenders who specialize in working with individuals with poor credit; also, there are lenders who specialize in working with individuals with superb credit. If you have outstanding credit, your options of lenders will be broad; however, carefully choose a lender.
http://www.moneyinstructor.com/art/homeloan.asp
Understanding Home Loans
One of the advantages of working with an exclusive buyer’s agent is that the agent has a legal duty to help you find a mortgage loan with the best rates and condition for your particular home buying situation. Exclusive buyer agents seek out and cultivate relationships with mortgage brokers and lenders with the best rates and terms in the marketplace.
Two agencies assist lenders as resources for home mortgage loans, the Federal Home Mortgage Lending Corporation (FHMLC) and the Federal National Mortgage Association (FNMA) commonly referred to as FreddieMac and Fannie Mae. Whether the lender source is a bank, credit union, savings and loan institution, or mortgage bank, these agencies only purchase mortgages that conform to their standards (guidelines).
The basic principles of mortgage lending for understanding home loans are based on the following information:
- Credit score of borrower which provides historical evidence of his willingness and ability to pay his financial obligations.
- An analysis of the borrower’s ability to repay the mortgage based on the monthly payment, including property taxes and insurance on the property, plus existing monthly bills in comparison to existing and projected monthly income.
- A review of the borrower’s liquid finances of the most recent sixty days from the time of application.
- An independent appraisal of the property conducted in accordance with Fannie Mae and Freddie Mac guidelines.
When it comes to home mortgage loans, one size does not fit all, so a government loan may be a better choice. FHA, VA, and FmHA mortgages offer some benefits not seen in conventional financing no money down or small cash layout, lower interest rates, long loan terms, and no prepayment penalties. But these loans which are targeted for specific types of home buyers take longer to obtain and may have low maximum mortgage amounts for your marketplace.
Having an experienced professional counseling you will help you identify the right kind of ‘mortgage product’ for your needs and to get a best rate and terms on your home mortgage.
http://www.naeba.org/buying/understanding-home-loans.htm |
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