Applying for a house loan can be a laborious thing, what with all the required papers and shopping for the right lending institution. What’s more, the amount the lender can offer you is dependent on what you are trying to purchase and the remaining funds you have from your net income.
These following pointers will surely come in handy:
Downpayment. The rule of thumb seems to be the more downpayment you could pay upfront, the more likely you are to be approved (reduces your monthly loan payment, too). Then again, if you have a very good credit history, you could be approved anyway without putting down more money but for those with bad credit, the downpayment amount could be a big difference.
Income source. Lenders will certainly look for a stable source of income so as much as possible, avoid changing jobs prior to applying for a loan.
Interest rates. Although loans not only depend on interest rates, the latter are important in identifying how much to pay on a monthly basis. Moreover, interest rates could still change while the loan is in process and being reviewed. So if you believe interest rates could increase, it might be better to pay a lock-in fee to have a fixed rate on your monthly payments.
Remaining funds. Aside from a good downpayment, you must have funds left for other expenses like closing costs. It will be a good idea to avoid big purchases until you have completed the whole transaction.
Credit standing. Obviously, a bad credit will make things hard for you but that’s not to say getting a loan will be impossible. Just don’t expect to get approved in the first few tries; keep applying to various banks and lending companies. After all, they have different lending criteria so one of them must be able to qualify you.
Something that comes naturally with bad credit is the high interest rate and there’s a big chance you won’t find one that you want. Lenders will usually offer you rates higher than what the market has. That’s because they know the risk that comes with bad credit score (a higher possibility of default) so they have to charge more from you.
Understandbly, if your credit record is not that good, you will have to put up with unfavorable terms also (aside from the high interest). But in here you could use some fraud alert: do not just accept any unfavorable terms without further consultation with other professionals or you may end up getting duped.
john soneric started this discussion 1 year ago. ( | permalink )