Qualifying For A Home Mortgage Loan

Mortgage Advice 2 Comments


Is Now the Best Time to Buy that House?

Find Out First If You Qualify Buying a house is both exciting and scary, especially for the first-time buyer. Most people prefer to factor in timing, in order to get the best rates. But other than being able to understand market trends, there are other things you need to look at to see if you qualify for that home mortgage. You have a steady source of income. Examine carefully your current cash flow.

Qualifying for a home mortgage means you are capable of a long-term payment commitment so you will need to consider your situation years from now. Try to foresee future expenses, plans, job movements and changes. You have enough money saved to last you at least three to six months in case your income source is cut or interrupted.

This means that you can continue to pay for your mortgage (along with other bills) and the lender has nothing to worry about. Your debts are under control. Sure you still make monthly payments on that student loan and that credit card and you still haven’t paid up the car loan, but if your debts are consistently paid with no bad marks at least a year or two from today, then you’re looking good.

That means you can be trusted. Your monthly total debt payments (mortgage, loans, credit cards) remain below or well below 38% of your gross monthly income. This shows the lender that you are capable of paying responsibly and that a home mortgage will not drive you to bankruptcy. If your credit history is less than perfect, it will not automatically disqualify you for a home mortgage, but a good history means paying lower interest rates and monthly mortgage payments.

Before talking to a lender, check your history from one of the three credit bureaus. There might be some errors you need to correct or you might want the best arrangement that can lift your credit rating a notch higher. You can afford to pay downpayment. You will need a sizable amount of cash to pay downpayment for your house of choice. That’s 20% of the total price. You may also choose a low or zero downpayment scheme, but it may not be cost effective in the long run. Decide to buy when you’re ready.

A house is probably the biggest financial decision you will ever make in your life so be sure you go into it when you yourself feel that you can handle the responsibility. All that timing in order to qualify really depends on you.


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