If you dream of owning a home, you are not alone. More people are choosing to own over renting or leasing. However, you know that you will need to qualify for a home mortgage in order to make your dream a reality.
When you apply for a loan, you need to prove that you can pay it all back. The lender will take into consideration your employment, whether your employed full time or part time, your monthly gross income, and other debts you may already be paying on and are obligated to. The lender needs to be reassured that if you are lent the money, you can and will pay it back.
A lender must decide your willingness to pay back the loan before you can qualify. He or she will look back in your credit history by obtaining a credit report to see how you paid off debt in the past. The lender will take into consideration if you made all the payments on time and if you were able to pay back the full amount.
You will need to provide your financial history income, credit report, assets, and more in order to determine the amount you will qualify for in a home mortgage. It is not always possible for a lender to lend out the amount requested due the problems in the past.
There are a few steps to take to ensure that you will qualify for a mortgage. Before going to a bank, get a copy of your own credit report. Go over everything that is on it and see how much you can clean up within a six month period. Satisfy what you can, when you can. Make sure that the debt is still owed before you pay on it. Many times, the debts are not marked as satisfied once a company has received the money.
Do not borrow any more money or finance anything. You will always want something when you go to the store; it is human nature. However, if it is not necessary than you will need to depend on self-control. If you have credit cards, pay them off as soon as possible and do not borrow against them anymore to avoid adding up your total debt. You also need to decide what you can afford to pay back in a loan and alternatives to paying back your current debt.
Savings is something that banks like to see. You should ideally have enough in savings to equal four to six months of your income. This shows the bank that you are prepared to continue to cover your expenses even if you would lose your job for a few months while you are searching for other employment.
Qualifying for a home mortgage is something to take serious; banks do. Before applying at a particular bank, make sure that they have enough to offer you as well. Every bank offers something different in order to stand apart from the other banks and financial institutions. You may get a better interest rate in one bank than you would another.
By John Benson