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It’s the American dream… buying the home of your dreams… a home you can be proud to call your home. However, buying a home can be tricky because your head tells you one thing and your heart tells you something else.
So, before you go ahead and think about getting a home mortgage to buy a house or condo/apartment or getting a commercial real estate loan to build a business building, make sure to research and understand the basics of loans .
First and foremost know your personal finances: ie how much do you earn in a month? What are your household costs (utilities, car payments, student loans, and etc.)? Determine your personal goals (do you like to travel or do you attend a lot of social events and gatherings)? Remember… everything costs money and if you are keen to live in a home then make a financial commitment to buy but if you like to travel and socialize then buying a home may not be the answer for you . Prioritizing your commitments will help make a good decision because all you’ll be left with is the mortgage payment.
Also, know your credit history or your credit score before approaching a bank to get real estate financing. There are many online sites that will provide you three credit scores so make use of the internet.
If you’re either a first-time home buyer or just trying to refinance a home mortgage, you already have some things in mind that potential home buyers should (or at least should have) before you do. Let the lender determine whether you qualify for a home finance loan from them.
1) What is your credit score or FICO score? This is a very important factor and usually the first factor lenders look at before going any further in their decision making. Generally speaking, banks want at least a 650 credit score; However, these candidates will pay higher upfront and interest cost (if the bank is willing to take the risk on this loan). It’s simple… the higher the credit score, the better your chances of getting a loan.
2) Potential lenders require job security from their applicants – usually two years of history.
3) If you are a business owner, you must show documents of your business history of two years or more; However, you can file for a “no-doc” loan. No-doc loans are specifically designed for individuals whose income is not paid through traditional paychecks or financial privacy is an issue for the applicant.
4) Income… Income… Income. Some lenders are willing to take out “high-risk” loans, regardless of credit score, as long as you can show proof of income, and as long as their monthly loan payment is at least 41% or less of your gross income .
5) Down payment is another important factor when the bank/lender is deciding on the loan. Prior to the housing “crash” many banks/lenders gave loans to individuals with little or no down payment (or 100% loans). Today most banks require at least 10% down payment to get a reasonable interest rate; However, banks will offer mortgage loan rates if you can put 20% down.
With all that being said, it can be quite frustrating for individuals who are stuck in the middle. There are a lot of people with high income levels with bad credit scores then loans who are trying to fix problems that they have created or were created in the past through no fault of their own.
It’s a vicious cycle… How can you fix your credit problem if no lender/creditor is willing to take a risk on you to improve your credit score?
Well… there are some loans available for individuals with similar problems, but it can come with a hefty price tag. Bad credit mortgage is designed for people who have a bad credit history due to default or late payments, bankruptcy, and etc. Contrary to what you might perceive from the loan terminology “bad credit,” the interest rate on this type of home equity loan is dramatically lower. over the past few years.
There are few lenders (both private and public) that are willing to mortgage bad credit loans, so it is important for the applicant to research privately or hire competent mortgage brokers to find the best possible mortgage quotes and rates for you. Is.
Just remember… not all lenders are the same, and not all banks are the same. You may get special services or leniency from your bank (or smaller locally owned banks) because you’ve already established a relationship with them versus larger banks with no personal interest in mind. At the end of the day… it’s all up to the discretion of the bank to say “yes” or “no” when you provide them with all the necessary paperwork.
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