Diane Stone - CENTURY 21 Commonwealth



Posted by Diane Stone on 9/17/2017

Do you dream about owning your own house? Has the idea of living in a property that adds to your personal equity started to appeal to you? If so, you're in good company. Each year, millions of Americans buy a house. Many of these homes are purchased with a home loan.

How you could get the right home loan

To protect themselves against loan defaults, lenders prefer to work with borrowers who have a history of being financially responsible. Doing so helps more than lenders.It can keep an entire economy from contracting, similar to the debacle that happened to cause the Great Recession.

Knowing what lenders look for in borrowers can help you to secure a home loan. To begin,your credit history is going to get reviewed while you're trying to secure a home loan. The amount of debt that you have and your history of making minimum or higher payments on these debts is going to be reviewed.

Your income, including income from second jobs that you work, and your spouse's income will also get looked into. Landing a higher paying job helps when it comes to securing a home loan. But, don't just increase your income.

Take advantage of military home loans if you served the country as a service member.If you work for a bank, you could get lower interest rates. Check with your employer to see how much you could save. If you don't work for a bank, consider securing a home loan through your current bank.

Opt for lower monthly mortgage payments

It could improve your chances of getting approved for a mortgage. It could also help you to save on interest payments. In addition to choosing a mortgage that has a lower interest rate, to secure a home loan:

Go after home loans that require lower monthly mortgage payments. Lower interest rates and military home loans are just two ways to achieve this. Applying for a home loan when the economy is recovering is another path to lower monthly mortgage payments. After feds start raising interest rates and the economy becomes stronger, mortgages generally rise.

Pay off as much debt as possible before you apply for a home loan. For example, you could pay off your auto loans and furniture. You can also pay off personal loans that you took out before you apply for a  mortgage.

Increase your liquidity. You can do this by investing more in stocks, cash savings and bonds. The value of your current home can also improve your liquidity. The value of a business that you own is another way to improve liquidity.

Get financial statements together to present to a lender. Items to get include income tax returns, pay stubs, investment account statements and business income, if you own a business. This includes an at home business. Also, get exiting loans and other debts together to present to lenders. The amount and type of debt may be sufficient, depending on the lender that you work with.




Tags: Real Estate   home loan  
Categories: Uncategorized  


Posted by Diane Stone on 7/24/2016

At a glance, buying a home seems like a daunting and complicated process. If it's your first time buying a home you're probably hearing a lot of terms that don't mean much to you like "rate commitment," "prequalify," and an array of acronyms that no one has ever really explained like APR and ARM. What many first time homebuyers don't realize is that the mortgage application process is relatively straightforward. It's a way for lenders to determine if they will lend money to the homebuyer. The lender will require some documentation on your part and you'll want to do your homework when it comes to choosing the right mortgage for you, but if you're confused about where to begin, here's everything you need to know about the home mortgage application process.

Gather your documents

Each lender will be slightly different when it comes to what records and documents they require from you. In general, lenders will require two years of work history, proof of income, and tax papers. They will also ask for your permission to run a credit check. Some things you should bring when applying for a mortgage include:
  • Your most recent pay stubs (at least two)
  • Your most recent W-2 forms
  • Completed tax returns
  • Bank statements
  • Gift letters
  • Debt - credit cards, student loans, etc.

Filling out the application

The actual application for the mortgage is pretty simple. Be expected to provide your personal and marital information, as well as your social security number. When you apply for a loan you'll also be determining if you're applying singly or with another person, such as a spouse. Some people apply jointly to seek a higher loan amount. However, you should be aware that if this is your plan of action the lender will require income and credit information from both of you. Keep in mind that it isn't easy to remove one person from a home loan once the contract is signed, so you should make certain of this decision before applying jointly.

Locked-in interest rates

It won't come as a surprise to you that, like in other industries, interest rates on mortgages fluctuate. For this reason, many home buyers attempt to "lock-in" their interest rate, meaning the lender is no longer allowed to change the interest rate after signing. The benefit of locking in your interest is that it can avoid having your interest rate raised before you sign on the home. The disadvantage is that since rates fluctuate, you could miss out on a lower one. This is also the difference between APR (annual percentage rating) and ARM (adjustable rate mortgage). With an APR, the cost of borrowing money (interest) is fixed. For an ARM, the interest rate can increase, decrease, or stay the same at different points in the repayment process.

Refinancing

Your financial situation is bound to fluctuate throughout your life, hopefully for the better. At some point down the road, it might make sense to refinance on your mortgage. Essentially this means you are agreeing to change the details of the mortgage to either accept a different interest rate or to alter the length of the loan term. Refinancing usually involves fees, however, so you don't want to rely on it too heavily as a fallback.