The path to home ownership lies in correctly aligning with a mortgage lender. Of course, that’s easier said than done because the person needs to prepare themselves for what lending involves. Orchestrating financing for a home purchase is just that, a serious task, composed of multiple individual mini-steps. Each step is important for applicants seeking loan approval from a qualified mortgage lender. When it comes to finding the right fit for home mortgage loans, applicants should first complete a few necessary tasks. Below are a few quick tips to serve as a starting point.
- Organize and streamline finances, work on increasing credit scores, before applying.
- Explore local and state home assistance programs, for first-time buyers.
- Find out what other opportunities are available, such as FHA, USDA, and VA.
- Initiate pre-approval, if possible.
- Don’t settle, ask about competitive rates from all qualified lenders.
- Maintain flexibility and fluidity, before signing a commitment, know all the costs.
A big deal about credit history
What’s the big deal about a credit history anyway? Well, good credit is akin to bargaining power, the higher the score, the more perspective lenders will authorize for the home purchase. Examining a credit history allows them to consider how likely the person will not only pay but pay on time, based on how they’ve handled past responsibilities.
In other words, lenders want to know if there’s anything in the applicant’s credit history, that makes them a financial risk. A high credit score alerts them that this applicant has a steady income and has an established history of paying their debt obligations on time.
Typically, applicants with fair or good credit receive loans with lower interest rates. Request the credit scores from all three major reporting agencies. Applicants should have a good understanding of the categories denoting creditworthiness, called the Fair Isaac Corporation (FICO) score. Achieving exceptional creditworthiness is a score of 800 or above, with 850 being the highest.
Seek and the applicant shall locate a good mortgage loan officer
Mortgage loan officers are often times called, home loan specialists. Loan officers provide information about adjustable rate mortgages (ARM) and annual percentage rates (APR) and (PMI) private mortgage insurance. So that potential homeowners can consider how much the loan will cost in the long-term. The long-term is something that takes all factors into determining how much the applicant can afford to pay back, for the life of the mortgage loan, 10, 15, 20, 25 or 30 years.
It’s not always pleasantries with home loan specialists, because sometimes they have to engage in tough talk. Expect a good mortgage loan officer to get the best rates and terms. They should explain fees, fair interest rates, and competitive dynamics and closing costs. “Competitive dynamics” is a modern development which protects consumers, applicants have the right to ask the mortgage specialist for lender comparisons, to shop around for the best mortgage loan. And above all else, there shouldn’t be a problem, asking for them to negotiate terms with lenders.
Fast, doesn’t necessarily apply to home loans
Don’t allow the pace of negotiations to determine how fast the home loan is approved. This is a final mindset, read everything twice, even the fine print. Individuals involved in securing home financing should be aware of every point of the application. Don’t rush to sign or commit to anything. The approval process takes as long as it takes. Even loan applicants with less than stellar credit may still qualify for first-time buyers programs.