Simple tips for getting a loan
ARM. APR. PMI. FHA. These are just some of the mystifying acronyms first time homebuyers will come across when navigating the ever-changing housing market. And before the fun of paint samples and fabric swatches can begin, securing the right mortgage loan should be your top priority.
At Delmar Financial, we understand that buying a home for the first time can be a daunting task, so we’ve complied some handy tips to help demystify the process and get you on your way to homeownership.
Do Your Research
When buying a home for the first time, you need ask yourself, what kind of loan will work best for me? Am I looking for a FHA, VA, Fixed Rate or Adjustable Rate loan? And how will my interest rates be determined? It’s important to explore your options thoroughly and understand the benefits and drawbacks of each alternative.
Thankfully, we’ve done a lot of the legwork for you! You can find the answer to these common questions and more by calling one of our mortgage loan experts at (314) 434-7000.
Once you’ve decided on a loan package, make an appointment with your bank to discuss the requirements for loan eligibility, the approval process, and the necessary materials and documents, as well as a projected timeline for approval. Since these requirements will differ based on your financial institution, it’s important to find out this information upfront in order to be prepared.
Know Your Credit and Your Limitations
When it comes to getting approved for a home loan, your debt vs. your income has the largest impact on the amount you can get approved for. This means that your income needs to be high enough to pay all of your debt, plus the payments for the loan. You will only be approved for a loan amount that falls within the limitations of your income vs. debt.
The health of your credit score is another important factor to take into consideration, as this impacts your eligibility for certain loan products, as well as your interest rate. While a low credit score suggests you’re a risky borrower, a high credit score can make a significant impact on the mortgage terms you are offered by a lender.
Since the range your credit score falls within significantly impacts your chances of securing manageable loan terms, it’s important to be aware of your credit score heading into the process. Most lenders consider a credit score of 740 or higher to be in the ‘perfect’ range for mortgages, while a score below 700 puts you at ‘fair.’ However, in theory, it is possible to qualify for a mortgage loan with a credit score as low as 580.
Prior to your application you should already be aware of your credit history and current score. Make sure you review your credit history for accuracy, as well as give yourself time to correct any errors in your history report. Further, be sure to consider your financial limitations and apply for the loan based on your financial ability to make repayments you can afford.
Ready to take the plunge? Fill out this free secure online application to get started!