5 Things That Can Affect Your Housing Loan

housing loanEvery year, the number of new homeowners dwindles.

There are several reasons why. It could be due to outlying student debt or diminished general appeal. Or maybe it’s simply the daunting task of trying to get a housing loan.

Becoming eligible for a loan can seem difficult, but no home seeker should let that stop them. We’re here to help you learn the things that can affect the approval of your loan.

Let’s get into it.

Credit Score

Banks and other lenders will take a look at your credit score to know whether giving you a loan will be a risky investment on their part or not. The amount of income you make doesn’t have much of a say on this. You could make a lot of money and still have a bad credit score.

Your credit score can have an effect on how much of a loan you can get, as well as the interest rate.

Take some time to find out your own credit score before approaching any lenders. Be certain to check your credit report for errors or flaws. You don’t want any wrong information to affect your rates or chance to secure a loan.

Being Self-Employed Can Deny You a Housing Loan

Regardless of how much you make in a year through your self-employment endeavors, the fact remains that it can look poorly to banks and other lenders. Self-employment can look far too variable in their eyes and can make you seem like a risky investment.

Unfortunately, there isn’t much you can do about this, but it is good to know about so that there aren’t any surprises coming your way.

A good thing would be to bring any pay stubs with you when meeting with your potential lenders. This could help you get a quicker approval.

Never Had a Loan

Strange as it may sound, sometimes being loan-free can be a bad thing. Because you’ve never taken a loan before, banks and other lenders can’t easily decide if you are a trustworthy client or not.

Are you the type of person to pay on time? They have no way of knowing and it’s likely they aren’t willing to take that risk.

One way around this predicament is to take out a small personal loan or credit card a year or two before. If you make the payments on time or are able to pay the loan back, you will build up your credit score and show banks that you can be trusted.

Debt to Income Ratio

A lot of the time, people will try to get a loan for far more than they can actually afford. This will, in turn, plummet their credit score and end up being more trouble than it needs to be.

Knowing your Debt to Income Ratio is a good way to figure out how to make a loan’s payment reliably with your monthly income, all while factoring in all of your other due payments as well.

Take a moment to look at your numbers before deciding how much to ask for your housing loan.

Being Dishonest

It could be tempting to try and hide a particular debt in order to get a housing loan, or maybe make a bad set of debt seem a little better. But honesty is definitely the best policy when it comes to dealing with banks and lenders.

Being dishonest in any of this will risk you being charged with fraud, and it will make it much more difficult to ever find a bank or lender that will want to work with you in the future.

Conclusion

We hope that this has helped you understand more about the process and that you’ll find it easier to expect what will affect your loan. We wish you all the luck in the world for the future.

The feeling of owning that perfect house is way too precious. And we want to help you!

If you have any questions or concerns, please feel free to contact us!

Your First Home: Should You Get a New House?

new house

When you make the decision to buy that first new house, it’s a big deal. Like, “keep you up at night thinking about it” big deal.

If you’ve been paying rent for a while, buying a new home could seem like the cheaper choice. And there are plenty of benefits for first time home buyers.

Here’s one big piece of advice though.

When buying a new house, know what to expect.

Of course, you can never fully know what to expect. With buying a house, there are always going to be unforeseen obstacles.

But there are expected payments and fees that you can be sure will be part of the process. So it’s best to get familiar with them before you take the plunge.

Down Payments

You want a good interest rate. But in order to get that rate, you’ll need to make a down payment on the house. You can expect at least 10%. So, for instance, on a $170,000 home, this will be $17,000.

And if you want to avoid private mortgage insurance (insurance that protects the bank in case you’re unable to pay your loan), it will need to be at least 20%. So now that $170,000 house will need a $34,000 down payment.

Homeowner’s Insurance

Maybe you had renter’s insurance, so this isn’t entirely new to you. But homeowner’s insurance is usually going to run you considerably more than renter’s insurance.

And it’s required before you take possession of your home. So once you’ve gotten mortgage approval and done all the footwork to get your new house, you’ll need to shop around insurance companies to find the best rate.

The good news is, you can lump your car insurance with your homeowner’s insurance and possibly get a discounted rate.

Property Taxes

This one often catches new homeowners by surprise.

If you’re folding your property taxes into your mortgage payment, that’s going to be an extra bundle of money you’ll need to pay each month.

For example, if you’ve been paying $1000 per month in rent and the mortgage payment on your new house will be around that amount, you might think you’re good to go.

But, if your yearly property taxes are $2400, then you’re looking at adding another $200 per month. So when you budget for your monthly payments, don’t forget to figure in your property taxes divided over 12 months.

Payments and Interest

Obviously, you have to pay your mortgage principal.

At the beginning though, much of your mortgage payments will be going toward paying just the interest. So you want to be sure you’re getting the best interest rate possible.

In the long run, a great fixed rate could end up saving you thousands of dollars.

And that’s just the beginning

On top of the above-listed considerations, there are other things like the fees tied up with escrow, tax services, as well as getting credit reports and a home inspection.

Still, there’s nothing quite too exciting as getting that new house for the first time. It doesn’t have to be scary. If you approach the experience armed with some knowledge, you’ll end up with a place you can truly call home.

Do you have any other helpful tips for those looking to buy a new home? We’d love your input!

Colorado Mortgage Tips: Why Work With a Local Lender

Buying a home in Colorado is most likely the largest purchase you will make in your lifetime. Unless you have just recently won the lottery or have a very generous rich uncle, you will need to qualify for a mortgage. When you begin to research lender options, knowing how to choose can be difficult. What is the difference between a local lender, mortgage lender, mortgage banker or credit union? And what do those variations mean to you as the consumer?

Working with a local Colorado lender that comes recommended from your real estate agent, friend or next door neighbor carries a lot more weight than one you randomly find online. In fact, a recent study shows that 90% of consumers trust recommendations from people they know, like and trust.

Why Work with a Local Lender

  1. You can look them in the eye – Sitting across from your lender while they explain the loan process is very different than trying to track someone down that’s across the country. How uneasy does it make you feel when you call to ask a question only to find out that the person you’re talking to isn’t even qualified in your state to answer that question?
  2. They can’t hide rates or fees – When you’re sitting face to face with someone, it’s very difficult to hide behind a computer screen. Working with a local lender allows you to go through every detail of the loan with a real person, not someone on the other end of a phone line.
  3. They should will show up at your closing – I can’t even count the number of times I’ve been asked by a real estate agent or buyer “what are you doing here?” when I show up at closing. It’s my duty to make sure you’re taken care of from beginning to end and that includes attending your closing. How can a National Lender answer last minute questions or handle any final needs of your closer when they’re half way across the country?
  4. The best rates possible – Contrary to what national lenders may tell you, a local mortgage lender will be able to offer you the lowest interest rate; lowest fee’s and best customer service available. Just because they’re smaller doesn’t make them less effective.
  5. Your best interest is a VA loan – Many mortgage companies are filled with loan sales representatives that will sell you a loan product regardless of whether or not it’s in your best interest. They are only interested in the numbers game and it has nothing to do with what numbers work best for you. They worry about their bottom line, not which loan program is right for your family. Working with a local lender ensures that they have an established reputation within the community. And if it’s not a positive one, well – you’ll find this out through word of mouth research.

Need a great local lender that will work hard for your best interest? Contact us today!