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. In order to acquire a home mortgage, you should pay attention to such variables so that you’re conscious of what is expected of you. While doing this, you need to make certain you don’t do anything to sully your credit. Below are some of the variables explained in details.
First and foremost, your credit report is a very important factor when applying for a mortgage loan. You should get copies of your credit report from the major bureaus and take you time to review them step by step. Be quite keen to notice errors because they may be a hindrance for you when searching for your home loan. In the procedure, you should ascertain whether your credit rating is worth which makes you eligible to get a loan or not. If your credit score falls in the prime range, you will definitely qualify for a loan. On the other hand, if it is considered subprime, then you will experience difficulty in being approved.
Whatever you earn is the other factor that should not be swept under the carpet. You need to have a stable source of income in order to qualify for a mortgage. Lenders are more comfy to give loans to people that have a steady source of income than those who are self employed. The reason for this is that self employed applicants possess irregular income because not all of the times businesses do well. Thus, lenders view irregular income as a greater 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 consider the loan rates and types. Usually, there are three forms 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.