Before applying for a loan, there are things lenders need you to perform. They consider a few factors before they decide whether to offer you the loan or not. To be able to acquire a mortgage loan, you ought to pay attention to these factors so that you are aware of what is expected of you. While doing this, you should ensure that you do not do anything to sully your credit. Below are some of the factors explained in details.
First and foremost , your credit report is an extremely important factor when applying for a home mortgage. You should get copies of your credit report in the major agencies and take you time to examine them step by step. Be very keen to detect errors since they might be a deterrent for you when applying for your mortgage loan. In the process, you should determine whether your credit score is worth making you eligible to get a loan or not. If your credit score falls in the prime variety, you will surely be eligible for a loan. On the flip side, if it is considered subprime, then you will experience difficulty in becoming accepted.
The amount of money you earn is the other component which should not be swept under the carpet. You have to get a steady source of income so as to qualify for a mortgage. Lenders are more comfortable to lend loans to people who have a steady source of income than those who are self employed. The reason for this is that self employed applicants have intermittent income because not all of the times companies do nicely. Therefore, lenders see irregular income as a higher risk. As a self employed individual who’s so much in need of a home mortgage, it’s advised that you have a prime credit score and additionally, a lot of savings to convince your lenders.
You should also think about the loan types and rates. Normally, there are three types of loans. Namely, traditional loans which usually demand higher down payments, payments backed by the Veteran’s Administration that requires you to be a veteran or on active duty to be able to qualify and Federal Housing Administration which is recommended for first time home buyers. Regardless of the kind of loan that you settle for, always bear in mind that your interest rates will be dependent on the current market requirements, your credit profile and the condition of market.
The next component that you need to think about when applying for a mortgage loan is Credit card balances. It is advised that you do not apply for new credit cards or even close your latest accounts because they may make the lenders suspicious of your actions if you know that you intend to apply for a mortgage loan.