Jul 14 2011
Where To Apply For A Home Loan
Being approved for a home loan is not so difficult but depends on a variety of factors such as level of income, job stability, savings, amount of down payment, credit history, and others.
First, crediting institutions favor applicants with an employment history of at least 2 years. In the best case, the applicant has worked for the same employer for two consecutive years. Frequent job changes and employment gaps lower the chances of being granted a loan . The borrower’s credit history is also important and the better the credit rating, the more favorable the conditions will be. Lenders look at the FICO score in order to assess the borrower’s creditworthiness. While lenders use a complex formula to compute the score, various factors are taken into consideration such as payment history, bankruptcies, collections, judgments, job stability, residence, and others.
It will not be difficult to obtain the loan if your monthly payments toward mortgages, auto loans, student loans, and credit cards are no more than 41 percent of your total gross income. The debt to income ratio is also important and generally, the less you have borrowed, the better the ratio.
The purpose of the loan is an important factor that determines the outcome of the application process. For example, if the borrower applies for a construction loan, the lender will usually require a down payment. A good credit history is also a typical requirement. Down payment is not always required, and some lenders feature zero percent down mortgages. Such bad credit home loan are not difficult to qualify for, but the terms of repayment are not favorable. Even a down payment of 5 – 10 percent helps reduce the interest rate on a home loan. The type of property is also important when assessing an application for a home loan. For instance, applicants who seek to buy a condo or manufactured home will pay higher interest charges. Those who want to buy a condo or a 4-plex in a high rise may be required to provide collateral. Commercial mortgages can be obtained for properties that consist of four or more units.
Applicants who are overloaded with debt are unlikely to be approved for a home loan, given the recent peak of foreclosures. Crediting institutions favor borrowers who own a house as it is not so easy, financially and emotionally, to just walk away. In addition, no-down loans are most often an option for borrowers with an excellent or very good credit history.
Applicants who run a business will be required to provide a history of the business and show the length of time their company has been in business.
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