Advice And Tips For Home Buyers In Qualifying For Mortgage

Advice And Tips For Home Buyers In Qualifying For Mortgage

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover and discuss advice and tips for home buyers in qualifying for a mortgage. Gustan Cho Associates get countless frequently asked questions daily from home buyers and homeowners asking for advice and tips on buying a home and qualifying for a mortgage. There are many reasons why home buyers need to purchase a home. Maybe the home a homeowner currently lives in no longer suits them. Maybe the main breadwinner of the household needs to move due to job relocation or need to move due to personal family reasons. Or many renters are ready to become first-time home buyers buy their very first home.

Buying Your First Home

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A home purchase is unlike any other purchase a consumer makes. A home purchase is most people’s single largest investment in their lifetime. Careful thought needs to go into the home buying due diligence process. Advice And Tips For Home Buyers are offered by many real estate industry professionals and veteran homeowners. In this article, we will discuss and cover Advice And Tips For Home Buyers In Qualifying For Mortgage.

Advice And Tips For Home Buyers On Where To Start

The majority of home buyers, including first-tme home buyers, search for homes online. The world wide web is full of advice and tips for home buyers and includes thousands of home listings. Homebuyers can start shopping for homes in the comfort of their homes. Homebuyers can search for the style of homes, what the market values are in certain areas, research property taxes, learn the amenities in the surrounding neighboring areas of the home they are shopping, the crime rate, and the proximity of public transportation as well as the proximity to shopping and expressways.

Researching Online and Comparing Information Resources

Real Estate websites like Zillow and Trulia include countless home listings along with colorful photos of the subject property. Buyers can search for mortgage blogs and mortgage websites. There are mortgage calculators online. Enter the price of the home, the down payment, the interest rate, the property tax information, and the insurance information and the mortgage calculator will give the exact figure of new housing payment.

How Much Can You Afford Versus Qualify

One of the main concerns home buyers need to think about is not what mortgage loan amount they qualify for but how much house they can afford. Websites like Zillow and Trulia will also list real estate agents and loan originators who advertise on their websites. Another great tool with Zillow and Trulia is that they list consumer reviews on real estate companies, real estate agents, mortgage companies, and mortgage loan originators by the public. Consumers will encounter good reviews as well as poor reviews.

Advice And Tips For Home Buyers: Qualifying For Mortgage

Homebuyers can shop for as many homes as they like and pick their dream home in the right area but without being qualified for a home loan, nothing will become reality. Once buyers have made the decision they want to purchase a home, the next step is to make to qualify for a home loan.

Choosing The Right Lender

Choosing the right lender to get you pre-approved is the next step. Before going out on a search for a lender, buyers need to do a self-analysis of their own financial and credit profiles. Those who have credit scores of over 800, make a great income with little or no debt, did not have any bankruptcies nor foreclosures in the past, they can go almost anywhere for a mortgage. However, consumers less than perfect credit, outstanding collection accounts, recent late payments, and lower credit scores, may need a lender that has no mortgage lender overlays. Or a lender that specializes in home loans with bad credit.

Mortgage With Under 600 Credit Scores

There are loan officers, like myself, who specialize in Home Loan With Under 600 Credit Scores. Borrowers with credit issues may try not to go to banks. Banks have higher lending requirements and lender overlays. Overlays are higher lending standards than the minimum federal mortgage lending guidelines. For example, to qualify for a 3.5% down payment home purchase FHA Loan, HUD only requires credit scores of 580. Most banks have overlays on credit scores where they will not accept any applicants without a minimum of 640 credit scores. This is called overlays on credit scores.

Advice And Tips For Home Buyers On Credit

Common advice and tips for home buyers include that they try to maximize their credit scores prior to applying for a home loan. Credit Scores is one of the most important factors when qualifying for a home loan and impacts mortgage rates. Lenders look at borrowers with lower credit scores as having a higher risk. Mortgage rates will be higher for those with lower credit scores. There are a few quick fixes in optimizing credit scores such as paying down your credit cards to 10% or less credit balance. A maxed-out credit card will definitely lower credit scores.

How Mortgage Rates Are Determined

Here is how mortgage lenders, as well as other creditors, judge consumer’s credit ratings:

Excellent Credit: 781-850 FICO
Good Credit: 661-780 FICO
Fair Credit: 601-660 FICO
Poor Credit: 501-600 FICO
Bad credit: Below 500 FICO

What To Do And Not To Do During Home Buying And Mortgage Process

Here are advice and tips for home purchase when it comes to maintaining the highest credit scores possible during the mortgage process:

  • No major purchases on any high ticket items such as buying a new vehicle or buying new furniture
  • No new credit and avoid applying for any credit
  • This is because hard credit inquiries will definitely drop credit scores

Do Not Close Out Existing Credit Accounts. Closing active credit accounts will eliminate an established credit tradeline. Will cause credit scores to drop and weaken consumer credit profiles.

Importance Of Job And Income Stability

Importance Of Job And Income Stability

Job stability is a compensating factor. Proves borrowers are stable and the likelihood of continued income is promising. Do not change jobs either prior to or during the mortgage process. Do not have any overdrafts in the bank account. Most lenders will not approve someone who had any overdrafts in their bank statements in the past 12 months. Do not make any irregular deposits without getting it sourced or documented and do not juggle money around from one bank account to another.

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