Ani’s Money Saving Tips 🙂
Getting a home loan can be a very confusing and overwhelming process. The process is different from getting other types of loans – like a car loan – but also much different than just renting an apartment. It can be easy to get denied from a home loan if you don’t do the research to see if you qualify for a few basic things.
With the advent of the internet, it can be easy to check what your credit score is through a variety of different handy websites. Just be sure to use one that is trustworthy and doesn’t lower your score. Even if you think that you have great credit, you should still check out your score, especially to make sure that you haven’t been a victim of identity theft. It’s very possible that someone could have stolen your identity, opened up credit cards in your name and then never paid off the cards, resulting in you not only having debt you didn’t know about in your name, but also lowering your score.
Some people get denied from home loans because they didn’t know about credit cards opened in their names. When you check your credit score, you should be looking for at least a 680 or 620 for FHA mortgage loans. Many lenders won’t lend to you if your credit score is below 680. If you happen to be below the cut off, don’t fret. By reducing the amount of debt you have, avoiding taking on additional debt and keeping a continual source of income you can raise your credit score.
Nerdwallet states that “if you have no credit history or what’s sometimes called a nontraditional credit history, which is one with no credit card debt or other kinds of loans, it might be harder to establish a set of credit stats. That could make it tough to find a mortgage lender who will work with you. But don’t give up; it’s not impossible.”
Many people have heard a lot about “zero-down” mortgages. Unfortunately, those are no longer the norm. In most cases, you will have to put down at least three percent. The more you can afford to put down, the better. If you don’t have any cash to put down at all, you will most likely be denied for a mortgage loan. Though three to five percent is typically the minimum amount you can put down to get the mortgage loan, you should try to put down more.
If you can put down at least 20 percent, you won’t have to have private mortgage insurance which lenders attach as a stipulation for those that put less than twenty percent down. Without private mortgage insurance payments, you can save a lot of money in the long run and putting more money down up front allows you to lower your mortgage balance as well.
Something that makes a significant difference in the approval process is proof of deposits above $500. These are considered “large deposits” made via cash, checks, or electronic transfer into your checking, savings, or other asset account. Each of these deposits must have an explanation as lenders need to know where they came from and would like more information on the source of that funding. This is to make sure there are no strings attached to the proceeds.
Just like you face hurdles with large sums deposited into your account, you may be questioned about your employment history and if there are any large gaps between jobs. When applying for a mortgage, the lender will want to know that you can and will repay your loan. Income from a stable job reflects your ability to pay while your credit rating represents your willingness. Contact our team at American Savings Financial Services to see if you qualify and we can help you get started on the process!