Thinking about getting a home for your family? You’re definitely not alone. Many people dream of owning a home that they can expand their family in, or just enjoy for themselves. No matter what you want, you’re going to want to make sure that you can really get a home that you’ll enjoy for many years to come.
On this note, the first thing that you’re going to have to realize is that you have to impress your mortgage lender. Of course, with so many applications, you might think that your mortgage lender will just green light your application without too much comment. That might have been true a long time ago, but those days are long gone now. Lenders today want to make sure that you are truly going to be able to afford the property in question not just in the short term, but in the long run as well. The problem is that in the past, lenders were way too lax about the type of applications they approved. When the housing bubble burst, the lenders paid for it with a lot of losses and a lot of problems. Now that the economy is starting to come back again, it’s time to start thinking about the type of people that are trying to get homes now. They need to be able to pay the mortgage each and every month, no matter what happens.
Good credit is going to be the name of the game here. If you don’t have at least a 650 credit score, you need to wait until you do. Even then, that’s a bit lower than what lenders want to see. So you will want to look at your credit report for anything that is an error or something that you can correct in a different way. A lot of people have had a history of making late payments, which is something that can only be fixed by choosing to pay all of your payments on time from here on out. It can take a lot of time, but it’s definitely worth it. Now, we’re not saying that a mortgage lender would refuse to approve your mortgage application if you don’t have a super high credit score, but you’re going to pay through the nose. Everyone gets a different interest rate, and the best creditworthy types are the ones that are going to get the best interest rate.
Income is going to be another issue that you will want to look into. A lot of the time people only look at their take home pay, and they’re missing part of the picture. You see, if you have other forms of income that are going strong, you will definitely want to include those. There are people that receive checks every month from royalties — those can be included as income. This is also the case with investments — there’s no longer a need to keep those things off the table. Of course, proper paperwork is a must — the mortgage lender isn’t going to just take your word for it.
One thing that you will need to make sure that you don’t do is apply for too much credit around the same time that you’re trying to get the home. Generally speaking, lenders don’t like it when you have two major purchases competing with each other. A house and a new car can be expensive together, and this increases the risk of default. Therefore lenders are not keen to greenlight you if you have a car loan hiding out there somewhere.
Another point that will become important is the down payment that you’re bringing to the table. The higher down payment that you have, the better terms that you’re going to be able to negotiate for. Lenders want to make sure that you’re serious, and that you’re committed. Cash is the best way to really assure them that you’re committed. You don’t have to show up with a suitcase stuffed with cash, either — simply having certified funds is more than enough. You can pick up a cashier’s check for the amount from your bank. Make sure that you talk to your banking representative for more information on that — every bank has their own policies, so we don’t want to get too specific here.
Overall, impressing your lender is a matter of being honest, having sufficient income, low debt, and good credit. As long as you can back up your claims with the proper paperwork, there’s no reason why you can’t move into the home of your dreams sometime in the future!