Although, the mortgage rates are amazingly lower, buying a
home can be a nerve wrecking process for the first-time homebuyers. The reason
is that they find it difficult to understand what to expect.
With that said, we are going to mention some tips that may
make the process easier for such buyers.
The credit
When it comes to qualifying for the mortgage, the first
thing that you should take into consideration is your credit score.
Mike Winesburg, who is the former mortgage planner with
McKinley Carter Wealth Services in Wheeling, says, “In addition, the standards are higher in terms of what score you need
and how it affects the cost of the loan.”
It would be worth mentioning here that just because you pay
everything on time doesn’t mean your credit score would be satisfactory. The
usage credit as compared to the credit limit, also referred to as credit
utilization ratio, is also the factor that matters considerably.
The lower is your credit utilization ratio; the higher would
be your credit score.
So, if you find out that your credit score is not in good
shape, repair it and maintain its good record for at least six months before
you consider buying a home.
The evaluation of
assets and liabilities
The good understanding about money that you owe and your
income is one of the major requirements if you want to buy a home. As Winesburg
says, “If I were a first-time homebuyer
and I wanted to do everything right, I would probably try to track my spending
for a couple of months to see where my money was going.”
This process also involves getting familiar with the process
of mortgage lending in order to know how lender would view your income.
For example, the self-employed persons often find it very
difficult to qualify for a loan because usually have a record of inconsistent
income.
Organize your
documents
The records of your income and taxes are the most important
documents t show when it comes to qualifying for mortgage loans. Normally, the
money lenders would ask you to show the records of years’ W-2s, tax returns and
a two-month record of bank statements. The lenders would ask you to submit
every single page of these two records.
Floyd Walters, the owner of BWA Mortgage, says, “Why it has to be every single last page, I
don’t know. But that is what they want to see. I think they look for
nonsufficient funds or odd money in or out.”
Be qualified for the
loan
Although the lender would tell you whether or not you
qualify for the mortgage, you may already know how much you can afford to pay
on monthly basis. Nevertheless, it’s a standard procedure and you must qualify
for it if you want the entire process to be smoother.
By taking into consideration your debt-to-income ratio and
the upfront payment you need to make, you can have better idea about your
affordability on overall basis.
Get a knowhow about
the down payment
Once you will have an idea about the down payment that you
need to make, there are several programs you can get help from. These programs
would provide you loan for making down payment in order to start regular
mortgage process. The interesting thing about many of these programs is that
they provide interest-free loans, making the repayment quite easier.
