6 Things to Know Before Applying for a Home Loan

There are some thing to keep in mind to ensure that your home buying process is simple. Here are six tips to help you feel confident when applying for a new home loan.

1.Pay All Your Bills on Time

When Applying for a home loan, it’s important you have good credit history, which includes paying all your bills on time, every time. A late payment may negatively affect your credit score and that can play a part in whether you’re approved financing and ultimately, the rate and term you may receive. Even after your home loan closes, it’s still important to pay your bills on time.

2. Be Wary of Employment Changes

A stable employment history is important when preparing to buy a new home. After all, you have to show that you have the stability and continuity of income to repay the loan.

Requirements may vary based on the type of employment you have, but for most salaried borrowers, there is no specific time on the job required. Generally, lenders will request to review at minimum a two-year work history.

3. Do You Own Research

With so many home loan options available, it may be difficult to determine the ones that’s right for you. While your lender will work with you to find the best option, it’s important that you learn the basics about fixed-rate and adjustable rate loans.

4. See What You Can Afford

After you’ve taken the time to do your own research, it’s time to see how much you can afford to spend on a home. For example, most budgets call for earmarking 28% of your post-tax income for a house payment, including your homeowner’s insurance and property tax.

5. A Few Things to Consider

What options are available in rates, points and fees (and yes, there’s more than one rate).

Hold off on opening any new accounts.

If you’re looking for a new home, there’s a good chance you’re going to be looking to furnish and decorate it as well. While that “5% discount on all furniture purchases” credit offer may look good at the moment, it’s best to put off opening any new credit accounts or lines of credit until after your loan has closed. Taking on more debt could impact the type of loan you receive or change the one already in process.

6. Hold Off on Closing Any Existing Accounts

Each item on your credit report contributes to your credit history or the record of your responsible repayment of debts. The longer your credit history, especially with a good payment record, the better. When applying for a new home loan, don’t close any existing accounts, even if they have a $0 balance.

Following these tips may help set you up for a success with a smooth home buying experience. Call us today with any questions you have! 713-802-0606

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