How to Determine Your Home Loan Eligibility

home loan eligibility

Are you looking to take that next step in your life? Have you finished browsing the net looking for that perfect place to call home?

Are you ready to become a homeowner?

Before you can actively start looking to purchase a property, the first sensible thing to do would be to check out your home loan eligibility.

Why?

Because knowing how much you can borrow not only helps you understand your own financial situation but also it stops you from getting your heart set on a place, only to find it out of your budget.

Let’s take a look at the best ways to check on your maximum home loan potential.

Calculate your Home Loan Eligibility Early To Set Your Search In the Right Area

When it comes to a home loan, the math is actually quite simple. You look at what you have coming in – your income – and you deduct your outgoings each month – your expenditure. The rest is just a matter of seeing how much you can realistically afford to pay back each month.

There are plenty of home loan calculators out there that can help you get a ballpark figure.

The main criteria that get looked at when applying for a home loan are:

Age – As harsh as it sounds, age plays a role in your home loan calculations.

Employment Status – if you are in a stable full-time job, then that is a big check in the plus column because a regular income shows the bank that you are in good standing to make your payments every month. The amount you are earning will also directly influence the amount you can borrow.

Credit Rating / Credit Card History –  If you have been living a debt free life, or at least maintaining your credit card by paying off your purchases in a simple large lump sum each month, then you score maximum points. The better managed your credit card history, the better image you produce for the banks looking to lend you money.

Choosing the Right Home Loan for You

There is more to finding a home loan than just understanding your home loan eligibility. Loan types and duration are also deciding factors.

The core loan types you should be looking at:

Fixed Interest –  The simplest loan. All you need to do is set your interest rate for 15-30 years and simply let your payments run. A great loan for those that are buying with the intention of staying put, and want to know exactly how much they will be paying for the foreseeable future.

Adjustable Rate Mortgages – If your credit rating is working against you, then you can counter balance this to some degree by taking a flexible interest rate loan. Here, the rate is set for a shorter period of time and will then be adjusted.

Federal Housing Administration Loan – For many people, being able to save the average 20% needed for a downpayment on a home, can be tough. With FHA home loans, you can put down as little as 3.5% on a down payment and move on with a fixed interest rate.

The only caveat with this is that you need to take out mortgage insurance, which you can spread over the life of the loan. This totals to approximately 1% of the full loan value.

Buying a Home is the Biggest Decision You Will Make

Making the decision to buy a home is one of the biggest things you will do in your life. To do so without due care and attention can be problematic.

By first understanding your home loan eligibility you can get yourself started on the next phase of your life with a clean conscience, knowing that you are not getting yourself into financial trouble.

If you need help with arranging your home loan or are looking for a quote, get in touch with us today. We are here to help.

Four Quick Tips To Buying Your Next Colorado Springs Home

Buying a home doesn’t have to be stressful! Here are four quick tips to make the process stress free!

1. Find a reputable, experienced real estate pro. Today’s Realtor will not only help you find a home, but also guide you correctly through the whole buying process.

2. Understand the process. Research as much as possible and know what to expect from beginning to end.

3. Know how much you can afford – Eliminate surprises by establishing a budget.

4. Don’t wait to buy real estate…. buy real estate and wait. Real estate is a long-term investment so take your time and find the right home for you and your family!

More information

FHA Loan Limits for Teller and El Paso Counties, Colorado

If you are planning to purchase a home in either Teller or El Paso counties in Colorado, FHA loans may be available that can help you turn your dreams into reality. First though, there are some things you need to understand about Federal Housing Authority loans that can help you make smart financial decisions.

An FHA loan is designed to guard the interests of lenders against the potential of a loan default by the purchaser.  The federal government assumes the risk of the loan and in most cases, offers the buyer more favorable loan terms with a higher dollar limit than he/she could otherwise qualify for. So, generally everyone wins.

Advantages

There are some distinct advantages to using an FHA backed loan to purchase your home. While there are definite limits on what you can borrow, you may qualify for a down payment as low as 3.5 percent.  The loans are assumable, so if you decide to upgrade to another home before your mortgage has matured, the next buyer may be able to assume your favorable rates. That’s important, because the interest rates right now are close to the lowest they have been in decades.

FHA loans also offer some protection to the buyer should he/she come on hard times. This has the potential to protect you if you should lose your job or become ill.  You have the ability to set your payment terms and if needed, you may be able to fund some improvements to your property under FHA. It is important to read your loan terms completely and seek the advice a real estate professional to clarify what your loan offers.

Disadvantages

Is there a down side?  Well, it depends on your perspective, but FHA loans are often capped for specific areas. The insurance and premiums you pay may cost more than a private mortgage and you may or may not be interested in granting the government an interest in your home loan.  It’s really up to you to do the research and understand the terms FHA is offering.

Currently, Teller and El Paso County FHA loans are capped at $284,500 for a single family home, $416,050 for a duplex, $502,000 for a tri-plex and a four-plex is capped at $625,000.  So, if you have wanted to make your home dreams come true in either Teller or El Paso Counties, consider asking your lender for an FHA loan today!

FHA/VA What You Need to Know about Financing Rural Homes

Rural property guidelines that must be followed when financing with an FHA or VA mortgage home loan.

Rural Home Guidelines 1

Courtesy of Mortgage Currentcy

Rural Home Guidelines 2

Courtesy of Mortgage Currentcy

Rural, FHA and VA Home Loan Guidelines

FHA vs VA: What Are the Benefits

FHA home loan programs and VA home loan programs are very similar; they both attempt to give access to affordable home loans to the American people. The biggest difference between the two is that VA home loan programs have been created for America’s veterans of the armed forces. But between the two, would-be home buyers are served. Where one program may not be the best for a borrower, the other program fills in.

VA Home Loan Facts

VA home loan programs are made for qualified veterans as part of the benefits extended after serving in the military. But in order to qualify for a VA home loan programs, a veteran must meet specific criteria:

•A veteran must have a Certificate of Eligibility from the Department of Veterans Affairs.

• A veteran must have good credit (usually for the past two years) and an adequate credit score.

• A veteran must have enough income to repay the loan.

• A veteran must meet debt-to-income requirements as outlined by the VA home loan programs.

• The home must be used as a residence after closing or renovations are complete

Some other individuals also have VA home loan programs available to them, including:

National Guard or Reserve members who meet specific requirements. Widowed spouses of servicemen who died in duty, who have not remarried. U.S. citizens and their spouses who served with an Allied country during World War II.

VA Home Loan Benefits

• No down payment loans

•Good fixed and adjustable interest rates, regardless of credit history

• Lengthened and flexible terms of 15-30 years or more

• No prepayment penalty

• Assistance during financial hardship

•Protection and warranty against discrimination and poor buildings

But some who have just limited time in the armed forces or who cannot qualify for VA home loan programs may still be able to work with the FHA home loan programs. Also, those with no military experience can work with the FHA home loan programs.

FHA Home Loan Facts

For those who can’t take advantage of the VA home loan programs, there are FHA home loan programs available. While the FHA home loan programs do not have many advantages over the VA process, there are some. With the FHA programs, more than half of the loan is insured, a benefit not available in the VA, which should be considered by veterans.

FHA home loan programs are similar to VA loans in many other ways, aside from the insured benefit.

FHA Home Loan Benefits:

• Low down payment

• Federal security, which can mean better terms from lenders

• Flexible terms

•Adjustable payment options

• Good interest rates and affordable payments

• Refinance options for existing loans

Qualifying borrowers can benefit from either the VA home loan programs or the FHA home loan programs. By meeting the requirements of each program, borrowers can make their home ownership goals a reality with good terms and through these good programs.

 

 

 

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