While others have already become an expert in loans over the years, many are just starting and are learning all about the different types of loans. The different types of home loans, in particular, is a hot topic for many individuals since it is also the most coveted one. More people aim to have their own homes since home purchase became a lot simpler and more accessible these days. In the past, there were no home loans, so only ten percent of American households have their own houses. But since the introduction of mortgage loans in the early 1930s, millions were able to acquire their own homes.
If you are aiming to purchase your first home on a mortgage, there are things you need to prepare for. These four requirements are mandatory. May it is FHA loans Laredo, VA loans or conventional loans, these basic requirements will never change. Thus, it is best to be ready with them before deciding on which mortgage loan to take.
Good Credit Report
A good credit report is significant in the U.S. It is a primary requirement for every loan you will apply for and even for credit cards. If you are on the process of building it, try to have a minimum score of 640 since that is the most common requirement for lenders. However, you also have to be aware that some lenders may require a higher rating at 680 wherein government-insured loans often accepts 580 as their minimum. The score is not the only basis for your approval. Lenders will also take into consideration your history. The secret to having a flawless one is to make sure that you make your payments on time. Remember, one bad credit report will stay in your record for seven years, and it will significantly affect your applications.
Your financial status is one of the most significant concerns for lenders. Thus, they will thoroughly check on your source of income per month as well as your expenses. They will also look into your bank accounts to see how you manage your finances. Do not leave a negative or zero balance on your mind since it could impact your application negatively. Take into consideration your credit cards too. Make sure you are current on your payments since it is one of their basis on what kind of payer you are.
Typically, lenders require you to have at least two years with your company for approval. However, there are some that are less strict. They allow different companies over the past two years as long as it is in the same industry. You also have to maintain a clean record with your employer.
Enough Down Payment
A down payment is necessary for almost every mortgage loan. For most, they will require you at least twenty percent of the total cost of the house. But then, there are some that only requires three percent. If you have the means though, it is best if you try to put down as much as you can so you will have a lower principal balance to capitalize.