First Time Home Buyer: What You Should Know About Home Loans
Are you thrilled about going on the search for a house so you can become a first time homeowner? If you don't have enough savings to pay for a home in full, you may want to think about applying for a loan. Find out below what you need to know about getting a home loan, as well as what happens after you purchase a house with the money.
What Does it Take to Get Approved for a Home Loan?
The first thing that you will need is good credit before a mortgage company will lend you money. A good credit score is one that is at least 661 or above. If there are a lot of debts on your credit report, it is a good idea to start paying them off. Opting for debt consolidation is the best way to get all of the bills paid without having to keep up with when multiple ones are due. If you have a lender in mind, ask them what specific credit score is considered qualifying, as different lenders will have their own rules.
Your income is the next thing that is important to mortgage companies. Basically, you must prove that you have had a steady income for a certain length of time (depending on the lender). The gross amount of income that you are bringing in annually will determine how much the lender is willing to lend.
Keep in mind that if you have filed for bankruptcy, it can have an effect on whether or not you will qualify for a loan. Approval will depend on the type of bankruptcy that was filed, as well as when it was filed.
What Happens After a Home Loan is Approved?
Once you are approved for a mortgage loan, you can spend all or some of it to purchase the home of your choice. You can also use a portion of it for furnishing the property if you desire to do so. Keep in mind that you can risk losing the home if you fail to pay the loan back. However, a mortgage loan can usually be refinanced to adjust the price if you fall into a bad financial situation. If you simply can't make the payments, your house can go into foreclosure.
With the right credit score and income, you are well on your way to qualifying for a home loan. Speak to a mortgage lender like MCS Bank to find out how much money you can get towards becoming a homeowner!