5 Home Loan Tips

The fulfillment of purchasing your first home is not comparable to any other for most individuals. Searching for your dream home can be an exciting endeavor, but before anyone can go on to looking for their ideal home, they must first go searching for the perfect loan.

1. Save up for a down payment

A down payment can vary from 0% to 20% depending on the lender and the type of loan you choose. Consistently setting aside a certain amount of money every month will help speed up the process of saving for a down payment. 

2. Check your credit report and arrange your financial documents

The type of loan you are able to qualify for depends on your credit report. A good credit report can give you a home loan that will most benefit you. Ask for your credit report from the three major credit agencies and review your credit score and history. If something seems off or there are errors, take the necessary steps to fix them before proceeding to apply for a loan.While you’re fine tuning your credit report, take the time to acquire any financial documents you may need to present to your lender when they request them. They may ask for pay stubs, previous year’s taxes, and bank account statements, to show that you will be able to make the mortgage payment. It’s always better to be ready, for a complete list, see your potential lender. 

3. Use a mortgage calculator

Mortgage calculators are very helpful to anyone looking to purchase a new home. It can help you calculate how much your monthly mortgage payment may be and it can help you understand various down payment and interest rate scenarios. You could also use this to help compare mortgage plans. There will always be points and fees that make one mortgage plan more expensive or complicated than the other. Make sure you give a lot of thought and planning before deciding on the right loan for you. 

4. Watch over your credit before your loan closes

It doesn’t happen often but there might be a slight chance that your lender would pull your credit report a second time to see if you’re consistent with your credit score. Just to be on the safe side, be mindful of the due dates on your credit card bills and hold off on taking out any loans until after your home loan closes. Even a small loan can affect the lenders decision. 

5. Review loan options and interest rates

There are different payment options for a loan, like a fixed-rate plan or an adjustable-rate plan. Review these options carefully and determine which would be better suited to your benfit. While your payment options can remain the same all through out your 20-year fixed rate loan, your interest rate may not be as predictable. Take the time to review the history of interest rates, and ask a lot of questions. You’ll know when the time (and the interest rate) is right for you. 

What would you recommend to someone looking for a home loan?