Where to Source the Money for Your Mortgage

Buying a house is one of the most significant milestones in life, symbolizing a personal haven from the outside world and an investment in your future. 

However, the process of financing such a substantial purchase can often be as overwhelming as it is exciting. 

In this post, we aim to demystify the process of sourcing money for your mortgage in a way that’s both simple to understand and straightforward to execute.

Savings and Budgeting

Embarking on the path to homeownership begins with a steadfast commitment to savings and budgeting. Visualize the joy of turning the key in your future home's front door as you craft a sensible budget that carves out a portion of your earnings for this dream. 

It's all about setting realistic goals and adhering to them with discipline using a harmonious blend of determination and mindful spending. 

At times, this quest may mean forgoing short-term indulgences, but each penny saved is a brick laid in the foundation of your personal sanctuary. 

Let your future abode be the beacon that guides your financial choices, knowing that with each sacrifice, you're inching closer to a mortgage that's lighter and a life enriched by the fruits of your resilience.

Traditional Mortgages

When it's time to plant roots and buy a home, traditional mortgages pave the financial path to your front door. Offered by established banks and credit unions, these loans are the bedrock of home buying, especially if you've cultivated a solid credit score and a stable income. 

The options are plentiful. Fixed-rate mortgages offer the comfort of consistent payments, while adjustable-rate options can sometimes present lower initial rates. 

And, if your financial plot is unique, government-insured loans like FHA or VA might provide that custom fit you need. 

Understanding these choices isn't just about signing on a dotted line; it's about securing a financial foundation as reliable as the home it supports.

Hard Money Lender

If your credit score or employment history isn't quite up to par, or you're simply looking for a faster and more flexible financing option, a hard money lender might be the solution. 

These private individuals or organizations base their loans on collateral rather than creditworthiness, making them ideal for short-term investments or fix-and-flip properties. 

Interest rates and fees may be higher, but the accessibility and quick turnaround time can make this option worth considering.

Assistance Programs for First-Time Home Buyers

Taking your first step into the world of homeownership can be as thrilling as it is daunting, but there's good news for those venturing down this path for the first time. 

A myriad of federal and state programs are specially designed to guide first-time home buyers toward achieving their dreams of owning a home. With options ranging from down-payment assistance to subsidized interest rates and even valuable tax credits, these programs are tailored to lessen the financial hurdles of home acquisition. 

They come with various eligibility criteria tailored to assist a diverse range of aspiring homeowners. Whether you're a long-time renter making that leap or a new family looking for a nest to call your own, it's well worth your time to explore these supportive measures. 

Remember, owning a home might be closer to reality than you imagined, thanks to these beneficial programs.

Loan from Retirement Funds

Tapping into your retirement funds for a first-home purchase can seem like finding an unexpected key to a door you thought was locked. 

Many retirement accounts offer the option to borrow against your saved nest egg, bypassing the early withdrawal tax penalties and bringing you closer to homeownership. 

While this path can be paved with immediate rewards, it's essential to tread prudently. Borrowing from your future necessitates a careful evaluation of the long-term impact on your nest egg. 

Remember, today's borrowing can lead to a smaller retirement fund tomorrow. 

As you contemplate this significant decision, consider balancing your dreams of a home against the golden years you've been diligently saving for.

Gifts or Loans from Family

Navigating the landscape of homeownership can be a journey filled with complex decisions, but for those fortunate enough to receive financial support from family, the path can become a little easier. 

Whether it's a generous gift or a structured loan, such contributions are a testament to familial bonds and the shared joy of investing in your future. 

However, engraving the terms of a loan from loved ones in clear, unambiguous language is crucial to preserve both financial clarity and personal relationships. 

Embrace this opportunity with gratitude, address every logistic with the same care you'd afford a bank, and allow this generous act to not only cement a foundation for your home but also strengthen the connections that make it truly a place of warmth and love.

Private Investors or Peer-to-Peer Lending

In the ever-evolving world of finance, private investors and peer-to-peer lending platforms are reshaping how we approach mortgage funding. 

Empowering borrowers with flexible criteria that often eclipse conventional forms, these modern lenders also underscore the importance of diligence by balancing competitive, yet potentially higher, interest rates with the freedom to negotiate terms that banks typically don't offer. 

Armed with innovation, peer-to-peer lending is not just a financial choice but a step towards a future of empowered, informed financial decisions.

Home Seller Financing

In the nuanced world of real estate, seller financing emerges as a unique solution, lighting the path to homeownership even when traditional lending is out of reach. 

Imagine a scenario where the seller becomes the lender, offering a personalized loan to the buyer. This financial handshake comes into play often when sellers are keen to pass on the keys quickly or when a property has lingered too long in the market’s embrace. 

While it's no one-size-fits-all deal, the adaptability of terms presents both parties with a canvas to draft an agreement tailored to their needs. 

Approach these opportunities with a negotiator's mindset, ready to discuss interest rates, down payments, and repayment plans. Seller financing doesn’t just open doors. It creates them where none existed before.

Final Thoughts

Remember, the path to securing a mortgage is as unique as the home you're looking to buy. Whether through savings, traditional loans, assistance programs, or more creative financing, the goal is to find the solution that aligns with your financial reality and homeownership dreams. 

Now that you're armed with the knowledge of where to source the funds for your mortgage, take the next step with confidence. Just imagine turning the key in the door to your new home. 

The peace of mind that comes from thorough preparation and understanding your financing options will make the first steps into your new home that much sweeter.

4 Benefits of Working with a Mortgage Lender

Are you planning to buy a new house or refinance your existing mortgage? If yes, then you must work with a mortgage lender. 

Having a lender on your side can make the home-buying or refinancing process smoother and less stressful. This blog post will discuss four benefits of working with mortgage lenders.

Access to a Range of Loan Programs

Mortgage lenders offer a variety of loan programs that cater to different needs. For instance, if you have a low credit score, you can still apply for an FHA loan, which requires a lower credit score than other types of loans. 

The various loan programs also have different interest rates, down payment requirements, and terms. By working with a mortgage lender, you will have access to a broad range of loan programs, which will enable you to choose the one that suits you best.

Professional Advice

Mortgage lenders are experts in their field and can offer you professional advice on the best loan program for you. 

They can help you determine how much you can afford to borrow, the interest rate you’re likely to get, and the monthly payments you will make. 

They can also advise you on what to do to improve your credit score, which can help you get a better interest rate.

Simplified Loan Application Process

The loan application process is usually complex and time-consuming. However, mortgage lenders can simplify the process for you. 

They will guide you through all the necessary steps and help you fill out the paperwork. They will ensure that you have all the required documents and that everything is in order before you submit the application. 

This will save you time and energy and increase your chances of getting your loan approved.

Faster Loan Approval

Mortgage lenders have vast experience in the industry, and they can help you get your loan approved faster than if you were to do it yourself. 

They have connections with various lenders and can match you with the one who’s most likely to approve your loan. They will also help you negotiate the best terms and conditions for your loan.

Final Thoughts

Working with a mortgage lender is beneficial for several reasons. They offer access to a range of loan programs, provide professional advice, simplify the application process, and expedite loan approval. 

If you’re considering buying a new home or refinancing your existing mortgage, you should consider working with a mortgage lender. They will guide you through the process and increase your chances of getting your loan approved.

How a Home Loan is Your Best Option When Buying a House

Buying a house is an exciting milestone in your life, but it can also be a little daunting. When figuring out how to pay for your new home, completely out of pocket is often unrealistic or downright impossible. 

Instead, there are different financing options out there to help you buy a home, and one of those is obtaining a home loan from the bank.

Affordable Interest Rates

One of the most attractive aspects of home loans is their competitive interest rates. Home loan interest rates are typically lower than other types of loans, making them more affordable and accessible. 

This makes them ideal for buyers with limited funds or those who need established credit. 

A lower interest rate means you'll pay less overall on a loan, so you can enjoy more financial freedom while owning your new home.

The Right Loan Amount

When buying a house, you need to ensure that the amount you borrow will cover all costs associated with the purchase, including closing costs, down payment, legal fees, and more. 

With a home loan, you can rest assured knowing that you're borrowing just enough money to cover all necessary expenses without overextending yourself financially. 

This also gives you peace of mind knowing that you won't have any surprises down the road regarding additional costs or fees associated with your purchase.

Tax Benefits

Another advantage of taking out a home loan is its potential tax benefits. Depending on where you live and the size of your loan, you may be eligible for certain tax deductions that help offset some of the costs associated with homeownership. 

Additionally, some lenders offer special deals and discounts if certain criteria are met, such as signing up for automatic payments, which could result in even greater savings over time.

Overall, taking out a home loan when buying a house is one of the best ways to finance this major expense in life. 

Not only do they offer competitive interest rates and tax benefits but they also provide peace of mind knowing that there is enough money available to cover all associated costs without overextending yourself financially. 

If you're considering purchasing a new house soon, make sure to look into what types of home loans are available to see if it's right for your situation!

What Does it Mean to Get a Raw Land Loan

Many people dream of building a custom home on an untouched piece of land, but that type of project can become quite complicated if you don't plan ahead.

In addition to designing the house and setting up the utilities, you will also need to consider your loan options for purchasing the land itself.

Traditional Home Loans

There are dozens of different home and land loans to choose from, and each financial product is for a very specific situation. The type of loan that you will need to acquire depends on some key factors, and that includes the state of the land, how the land is zoned, and what types of structures you are building. 

For a piece of land that doesn’t have any structures or utilities, you most likely won’t be able to use a traditional home or construction loan.

Overview of Raw Land Loans

A raw land loan allows you to buy a piece of property that doesn’t have any existing sewage lines, electrical lines, wells, or structures. 

With that type of loan, you will need to verify that the land has had no previous improvements carried out on it, and that means there is no collateral other than the land itself. 

You must also verify that the land is properly zoned for personal residences, growing food, raising animals, and any other uses you are considering.

Finding the Right Lender

To purchase the property, you will need to work alongside a reputable lending company, someone like Raw Land Lenders, that has experience with those types of loans. Purchasing raw land is slightly more complicated than most people realize, and there will be a few extra steps that must be carried out. 

Your lender will need to know exactly what you plan on doing with the property and take an extensive look at your current financial situation.

Getting Approved

The approval process is carried out over a few steps, and you should start getting your finances in order well before you send out any applications. 

Improving your credit score is a great start, but building up a sizable down payment is going to be necessary as well. You will also need to research the land and come up with a comprehensive plan for what you are going to do once you are approved. 

Lenders want to see buyers who have done their research and have an actionable plan in place.

Purchasing raw land can open up countless opportunities, but getting a loan for an undeveloped piece of property is going to take some time. Luckily, with a little bit of patience and some assistance from a reputable lender, you could be building on your land before you know it.

What Factors Should You Consider when Applying for a Home Loan?

Buying your ideal house necessitates a significant financial commitment. A house loan can help you buy the home of your dreams. With interest rates at an all-time low, the home loan industry is humming with many appealing offers from multiple banks and financial institutions

Even if an offer entices you, you must exercise extreme caution when choosing a house loan. A minor blunder can have disastrous ramifications for your financial future. Several banks now provide home loans with interest rates as low as 7%. 

However, interest rates will not remain steady indefinitely. Bank interest rates are influenced by a variety of things. In this article, we take a look at all the factors that one must keep in mind when applying for a home loan.

Credit Rating

Your credit score is a crucial deciding factor in whether or not you will get approved for a home loan. Your credit score is a numerical assessment that measures your ability to repay your loan. 

It's a measure of your financial well-being. In basic terms, it demonstrates how diligent you have been in repaying previous bills and credit card payments. Financial companies want to lend to those who have a good credit history. 

A good credit score will help you get approved for a loan more quickly. For obtaining a loan, a credit score of 750 or more is considered good, while anything under 700 is considered bad.

Existing Debt Obligations

You have many loans, and credit card payments due are not an issue. When you apply for a loan, however, consistently missing your EMIs, repaying after the due date, and fluctuating payment of your credit card bills all cause anxiety to the lender. 

Your chances of getting a loan will diminish if the lender notices a pattern. To be eligible for greater sanction amounts at competitive interest rates, it is recommended that you pay your EMIs on schedule and settle any outstanding amounts.

Processing Fees

To process your loan application, the lender will charge you a processing fee. Since most banks and housing finance businesses impose processing fees as a fixed percentage of the loan amount, the processing fee is determined by the loan amount. 

A home loan processing charge typically ranges from 0.5 percent to 1 percent of the loan amount. Some lenders, on the other hand, charge a fixed processing cost regardless of the loan size. 

Because house loan amounts are typically large, even a little percentage change can make a big difference. Make sure to go with the lender offering you the best terms and conditions and the lowest processing fee.

Job Security and the Number of Dependents

Banks pay special attention to applicants who have a higher number of dependents. The more dependents you have, the less likely you are to get approved for a loan with lower home loan interest rates. 

Lenders assume that as the borrower's monthly paycheck is spent more on dependents, the borrower's loan repayment capacity reduces, resulting in late or missing EMIs. Stable employment and consistent income help to create a positive impression.

Type of Interest Rate

When getting a home loan, one of the most significant decisions to make is to carefully choose between the two interest rate plans available in the market: floating and fixed.

In the case of floating interest rates, interest rates fluctuate over time in response to changes in the RBI's base rate and general market conditions. 

Floating rates are typically 1% to 2% cheaper than fixed rates, allowing for long-term savings. If a drop in interest rates is projected soon, this choice is appropriate.

In the case of a fixed interest rate, the interest rate does not fluctuate over time. When the economic climate indicates that interest rates will rise, this alternative is appropriate.

A fixed interest rate is preferable for a loan with a short term (less than 7 years). If the loan is for more than 15 years, it is best to accept a floating rate loan because you cannot forecast changes over such a long time. Finally, based on their suitability, an applicant must pick between floating and fixed interest rates.

Insurance for Home Loans

Home loan insurance, also known as loan cover term assurance, is a form of insurance plan that protects your family financially in the event of your untimely death. 

In the unlikely event that something goes wrong, the insurance provider will return the outstanding loan amount for which the insurance cover was obtained. This assures that your family will not be burdened financially by overdue dues. 

Many banks and home finance businesses require the purchase of a loan cover term assurance plan to avoid defaults in the event of a disaster.

Understand the Laws Regarding Foreclosure

Keeping a close eye on the shifting RBI rules could benefit you on several levels. You avoid paying any additional fees by foreclosing your home loan by repaying the outstanding amount shorter than the agreed-upon deadline. The sooner you pay off your debt, the better your credit score will be.

Before applying for a house loan, it's critical to double-check your eligibility and other criteria. If you plan to apply for a loan, we recommend keeping the above factors in mind as this will help you close the best home loan deal.

Is It Better to Get a Home Loan From the Bank or a Lender?

When you are ready to buy your home, there will be plenty of choices. The two most common options to finance your home are non-bank lenders or large banking institutions. However, each of them has some differences, and your choice could depend on what's important to you. Learn more about how they differ below.

What is the Difference Between a Bank or Mortgage Lender?

Either a bank or a lender can help you get the funding to secure your new home. The applications will depend on credit, income, and debt qualifications. However, there are some critical differences between the two.

Mortgage lenders have several loan options, while banks have fewer options. Also, banks will usually have tighter credit requirements. It's common for mortgage lenders to sell your loan to another lender after closing. Home loans can be secured with either option, but you should consider how they differ.

No matter who you choose, having a decent credit score can only help in your effort to secure a loan, whether it be through a lender or a bank. 

If you’re unsure of your credit score or how it would perform, you’ll want to focus on increasing your score to at least 700 or higher. In fact, if you were able to get a score of over 800, you could likely get yourself a better interest rate.

How to Know Which Is Right For Me?

There are some pros and cons to each option. Let's start with banks. Banks generally have lower interest rates and will continue to service your loan after closing. Also, they may offer special rates if you already have other financings through them. Banks typically try to promote better loan terms and products to maximize their revenue.

Some cons to bank lending include having stricter lending standards, more fees, and longer closing times. One of the more challenging pieces of a bank loan is getting approval. It's generally more difficult to qualify for a bank loan, and the process takes much longer.

Mortgage lenders have many pros, including more options, quicker loan closing, and may be more willing to negotiate the terms. However, some cons include the servicer selling your loan to another lender after closing, meaning you can expect changes to how you’d pay your loan to the new lender.

Lenders and banks both have their advantages and disadvantages to offering loan services. Thus, it's best to shop around and determine which option is best for you. You can get quotes from several different lenders and banks and compare rates, terms, and closing costs from each. Ask lots of questions to understand your agreement.

What You Can Do to Prepare to Qualify for a Home Loan

Now that you have decided the time is right to buy a home, your next step is getting yourself in the best possible position financially so that lenders will be eager to approve you for a home loan.

Since doing so will get you a mortgage that has excellent terms regarding interest rates and other costs, you want to give yourself plenty of time to get everything in order before applying for your loan. 

To make sure you get an excellent loan that lets you buy your dream home, take the following steps right away.

Check Your Credit Report

Believe it or not, most credit reports contain errors. If yours has errors, such as stating you were late on payments or failed to pay off a previous loan, you can forget about most lenders giving you a home loan. 

Since lenders will always check a loan applicant's credit report when considering a loan application, beat them to the punch by checking it yourself. Should you discover errors, get these fixed before seeking your home loan.

Pay Down Your Debts

When you seek a home loan from a lender such as Fairway PNW, they will always look at the amount of debt you already possess in comparison to your income. 

If you can pay down credit card debt and other debts before applying for your mortgage, your debt-to-income ratio will be much more favorable, increasing your chances of being approved.

Save Up a Large Down Payment

If you start planning early on to buy a home, one of the best things you can do to get the best home loan is to save up as much money as possible to provide a down payment on your dream home. 

For example, if you can save up 20-25 percent of the home's price as a down payment, most lenders will believe your financial position is strong enough to allow you to make monthly mortgage payments.

Know What You Can Afford

Finally, take time to think about how much house you can really afford. By doing so, this will let you know how much money you will need for a down payment, what type of home loan you should seek, and which lenders will likely be willing to work with you to help you get approved for your loan.

Though it will take some work on your part, preparing ahead of time for a home loan will soon have you getting a mortgage you can afford. Before you know it, you will be walking through the front of your new dream home.

 door of your new dream home.

Benefits of a Home Loan for Women Homeowners

In recent years, an increasing number of women have become an integral part of the process when making home purchase decisions. 

Coupled with financial independence, they have been contributing equally to home loan repayments, whether as single/main applicants or as co-applicants. 

They have a distinct edge while negotiating favorable terms, the rate of interest, and processing fees with banks and lenders. Home loans, especially, aimed at female house owners are a huge cost-saving opportunity and hold numerous advantages.

Home Loan Benefits for Women Home Buyers

There are several benefits attached to a home loan if it is availed by a woman. Here are some of its merits:

1. Higher loan eligibility - If earning women apply for a home loan with their spouses as co-applicants, their combined income increases the home loan eligibility. This offers them more flexibility in choosing properties and they can even opt for a bigger house.

2. Longer repayment tenor - Home loans for women are offered for a longer tenor. This, automatically, lowers the EMI and helps them make the repayments comfortably. 

Additionally, they can meet all their commitments and regular expenses without feeling the burden of the monthly EMIs, utility bills, credit card bills, etc. 

They also benefit from making foreclosures and part payments on their loans without incurring any penalty or other charges.

3. Lower interest rates - Many financial institutions have low-interest loans for women applicants. A lower rate of interest impacts the EMIs significantly and you can also use Home Loan EMI Calculator for calculating your monthly EMI which helps to make bigger savings over the entire loan tenor.

4. Income tax benefit - If the husband and wife jointly apply for a home loan, they can enjoy more tax deductions on the loan repayment of the principal and the interest amount. 

Individually, each can claim a maximum rebate of Rs.1.5 lakh on the principal (under Section 80 C) and Rs.2 lakh on the interest (under Section 24) components of the EMI. 

Together, they can avail of combined tax benefits of Rs.3 lakh on the principal and Rs.4 lakh on the interest of their home loan. This amounts to significant tax benefits.

However, the actual tax benefit enjoyed by each co-applicant is in proportion to their contribution in repayment of the principal and the interest, subject to the mentioned limits.

5. Lower stamp duty - To encourage female home buyers, many state governments charge 1-2% lower stamp duty from women property owners. 

This enables them to save a considerable sum on their home expenses. So, if a borrower opts for a house worth Rs.80 lakh, she could easily save Rs.80,000 to Rs.1,60,000 in stamp duty exemptions.

6. Better chances of home loan approval - Market trends indicate women have better savings potential as compared to men. They avoid unnecessary debts, make sound financial decisions, and have lower default rates. 

All these factors establish them as more responsible borrowers. Lenders, therefore, are more inclined to offer home loans to female borrowers with attractive loan terms and specialized schemes.

7. Pradhan Mantri Awas Yojana (PMAY) - Under PMAY, house owners belonging to EWS, LIG or MIG sections of the society can claim government subsidies up to Rs 2.67 lakh on the principal amount of their home loan. 

The subsidy amount is given upfront on the principal outstanding, thereby lowering the interest component. It is, however, mandatory for a woman to be either the sole or joint owner of the property and preference is given to female applicants, especially, widows and single women.

Eligibility Criteria for Women Home Loan Borrowers

Like any other home loan applicant, female loan applicants must meet the eligibility requirements laid down by the lender. Both salaried and self-employed women can apply for a home loan. The eligibility criteria include:

• The applicant should be a residing citizen of India.
• In the case of a salaried woman, she must be between 23 to 62 years of age, while self-employed ladies should be between the ages of 25 to 70 years.
• She must have a minimum work experience of at least 3 years if she is salaried. And, self-employed women should have a business continuity of at least 5 years.
• She should have a credit score of 650 and above.

Interested applicants can, further, check their exact home loan eligibility by using a home loan eligibility calculator online.

Documents Required for Home Loans for Women

The documents necessary for a home loan may differ with each lender. But, the common set of documents that are, usually, required can be summed up as follows:

• Proof of identity - PAN card, Aadhar card, Voter ID, valid passport, driving license, etc.
• Proof of residence - Aadhar card, ration card, copy of utility bills like telephone bill, water bill, electricity bill, and so on.
• Proof of income - Latest salary slips and Form 16 (salaried applicants), P&L statements, TR documents, proof of business (self-employed applicants).
• Other documents - Passport size photographs, duly filled form, and bank statements.

This list is indicative and borrowers may have to furnish other documents, as and when required.

Summing Up

The benefits of a home loan extended to women save on costs associated with buying a house and expedite the entire loan approval process. They also reduce the burden of EMIs. With favorable government laws and the support of financial institutions, women can enjoy homeownership even more easily.

How to Adjust Your Home Loan When You Get a New Job

When you sign mortgage papers, you will likely fail to consider what will happen if you change jobs. However, if you find yourself making a career change that results in lower pay, you will need to have your home loan adjusted accordingly. 

Below are a few ways you can adjust your mortgage so that it better aligns with your current income.

Refinance

If you suddenly find that you cannot afford your mortgage payments after beginning a new job, refinancing may be an option. While lenders do not always want to refinance if you have just started a new job, it will depend on several factors. 

Many times, as long as you are still in the same profession, they will be happy to help. Other factors lenders take into consideration are payment history and credit score. 

Maintaining a solid credit score is essential when financing your home. You may even want to consider building your credit prior to starting a new career.

Loan Consolidation

Another option for adjusting your home loan after changing jobs is getting a consolidation loan. If you have other loans, you can find a lender who will consolidate them all into one monthly sum. 

They will typically work with you to give you a lower payment than you currently have. In addition, consolidating your loans will make it much easier for you to keep track of regular payments.

Loan Modification

Most people don't realize it, but it is possible to have your home loan modified if you change jobs. However, this is a difficult task without help because some banks may not be able to assist you. 

If you would like to modify your home loan, contact a loan modification lawyer. Loan modifications can lower your monthly payments and sometimes they can even lower the principal owed.

Chapter 13 Bankruptcy

If you are having problems paying more than just your mortgage after changing jobs, it may be time to consider filing for bankruptcy. Chapter 13 will allow you to keep your home and the equity you have in it. 

You will still be required to pay the mortgage, but other loans will be forgiven. This loan forgiveness could make it easier for you to make your mortgage payments.

There are a variety of reasons that people change jobs. Ideally, they would be switching to a higher-paying job, but that is not always the case. 

This is especially true now that the COVID-19 pandemic is wreaking havoc on the economy. If you are struggling to pay your home loan after getting a new job, don't get discouraged. 

There are steps you can take to adjust your payments. Speak with a financial specialist today to help you make the best decision for you and your family.

What Do You Need To Get Approved For A Home Loan?

Now that you have found the home of your dreams and are ready to buy rather than continue paying rent to a landlord month after month, it's time to start crunching the numbers.

Since you're going to need a substantial loan to make your purchase a reality, it is important you do your homework beforehand to ensure the loan process goes as smooth as possible.

As you're preparing to seek a loan to buy a home, here are some things you'll need to get approved by your lender.

Proof of Income

Before any bank or other lender gives you a loan to buy a home, they want to make sure you are actually making enough money to pay back the loan. 

Therefore, you will need to produce proof of your income prior to getting loan approval. In most cases, this means recent pay stubs, W-2 forms from the past two years, and possibly tax returns from the previous two years as well.

Good Credit

While in some circumstances it is possible to obtain a home loan with less than perfect credit, the majority of lenders require loan applicants to have good credit. 

While you should be able to get a loan with a credit score of at least 620, the lowest interest rates often go to those applicants whose credit scores are 760 or higher.

Employment Verification

While your pay stubs and W-2 forms may show you are employed, many lenders take things a step further to verify your employment status. Therefore, expect your lender to call your employer to verify your employment and the amount of your salary. 

If you have changed jobs just prior to applying for your loan, the lender will likely call both your previous and current employer to get the information they need.

Driver's License and Social Security Number

Even if you tell your lender your credit rating is good, they won't simply take your word for it. Instead, they will want to pull a credit report on their own so they can look it over before deciding the fate of your loan request. 

To do this, the lender will need to copy your driver's license and have your Social Security number. If you object to providing this information, chances are your loan application will be denied.

Since you want to do all you can to make sure your loan application is approved, taking the time to gather together the paperwork required by your lender may pay off in you soon moving into your dream home.

3 Reasons to Get a Home Loan

When it comes time to buy a house, most buyers will have to resort to a home loan. Although it may be tempting to save up and pay for a house in cash, getting a traditional mortgage is a better option for the overwhelming majority of consumers.

Here are three reasons you should consider getting a home loan when you buy real estate.

You'll Be Able to Buy Much Sooner

The most obvious advantage of a home loan is that it will allow you to buy and move into your new house much sooner. For all but the highest income earners, saving to pay for a house in cash can take years or even decades.

During that time, you'll have to continue paying rent that could otherwise be spent making payments on a home of your own. In almost all circumstances, the ability to buy quickly and begin building equity in your own property makes a home loan a much better solution than saving to pay for a house out of pocket.

Your Money Can Work Harder

Even if you have enough saved to buy a house without a mortgage, there's still a fairly strong argument in favor of home loans. Mortgage rates, particularly these days, are very low.

When compared to the historical average of the stock market, you'll actually come out ahead by investing your money while paying a much lower rate of interest on your mortgage.

While it may seem counterintuitive, your money will actually work harder when you invest it than when you save it to put toward a home.

Home Loans Provide Protection Against Inflation

As recent experience has proven, high inflation can quickly eat away at your savings. This can be a serious problem when you're saving toward a purchase as large as a house.

When you take out a loan, though, your payments are determined at the outset. This means that even during periods of higher inflation, you can predict what you'll have to spend and not have to worry about your payments rising.

It should be noted, though, that it only applies to fixed-rate loans. If you take on a home loan with a variable interest rate, you could see your payments increase if interest rates rise.

As you can see, there are many good reasons to finance your home purchase with a loan. While there are exceptions to every financial rule, the vast majority of home buyers are better off using home loans than trying to save and pay for their new homes out of pocket.

5 Reasons You Might Not Qualify for a Home Loan

Now that you have found your dream home, you thought qualifying for a home loan would be the easy part. However, this may not be the case. 

Although lenders are generally more eager now than in past years to approve mortgage loans, there are some instances where you may be denied the loan needed to purchase a home. 

Should you be preparing to apply for a home loan, here are some of the most common reasons why you may be turned down.

Poor Credit History

If you have had past credit problems, your poor credit history may be the reason your loan application was denied. Since a lender wants to make sure you are not a high-risk applicant, any problems with foreclosures, bankruptcies, or credit cards could be reason enough to deny your claim. Generally, if your FICO score is under 620, your loan will be denied.

Income/Asset Documentation

Even if you think you have enough money to make a monthly mortgage payment, your lender may not think so, especially if you are unable to provide sufficient documentation regarding your income to debt ratio. 

Should questions arise about this or other related areas, private equity representation may be what's needed to let everyone make a well-informed lending decision.

Very Small Down Payment

If you put down a minimal down payment on your new home, the lender will view you as a high-risk applicant, and thus may deny your loan. If possible, try to put down as much as 25% of the home's price as a down payment, since this will almost guarantee approval.

Issues with the Property

If your new home is appraised at an amount that is far less than the amount of the mortgage loan, your lender may deny your application. While you can get a second appraisal, your best option is to shop around for other lenders.

Limited Employment History

Should you possess a limited employment history or have one where you have changed jobs frequently, this can be used against you by your lender to deny the home loan. 

In most cases, a lender will want you to have at least two years of consistent employment with your current employer prior to approving your loan.

If you have had your home loan application denied, don't give up. By seeking out other lenders and making improvements where you can, it is quite possible you may still get the loan needed to purchase your dream home.

Looking to Buy a House? Choose a Home Loan That Is Right for You

Purchasing a home can be a very overwhelming process. One of the more intimidating parts of the process is determining what kind of home loan is right for you. This article will break down some of the types of loans available to you and hopefully help you choose the one that is right for you.

Non-conventional vs. Conventional Loans

The two main types of home loans available are government, also called non-conventional loans, and conventional loans. Whether or not you should choose a non-conventional or conventional loan depends on many factors including eligibility and your personal financial situation.

A home loan broker can help you explore all of your options, find the loans you may be eligible for, and help guide you through the application and approval process. Be sure to find an experienced professional that can help you make the right decisions.

Non-conventional Loans

Government loans are easier to qualify for because they are backed by the government, and should you be unable to pay back the loan, the government will make sure the lender’s loss is covered. 

Common types of non-conventional government loans are Veterans Administration (VA) loans, Federal Housing Authority (FHA) loans, and U.S. Department of Agriculture (USDA) loans. 

Government loans are generally easier to qualify for because they have less strict requirements in terms of credit score and require less of a down payment than conventional loans do.

Conventional Loans

Conventional loans are somewhat harder to qualify for than government loans but are overall less costly. Conventional loans can either have a fixed interest rate that stays the same throughout the life of the mortgage or an adjustable interest rate in which the interest rate can fluctuate over time. 

Most often, people opt for a 30-year fixed-rate loan because the payment is generally most affordable. There are also fewer common types of conventional loans like renovation loans, balloon loans, bridge loans, equity loans, and reverse mortgages. 

A home loan broker can help you look over your options, determine what you may qualify for, and help you decide what kind of conventional loan is best for your situation. You may end up paying unnecessary costs if you decide to choose a loan without the help of a broker.

To conclude, there are several types of home loans available to home buyers. It is important to be aware of your particular financial situation and goals to determine which kind is right for you. If you need assistance, home loan brokers are a great resource to help analyze your situation and guide you through the process of obtaining the mortgage that is right for you.

Buying a Home Soon? How to Simplify the Process

There’s no doubt about it; purchasing a home for the very first time can be an exciting time in many people’s lives. The prospect of starting anew can be a welcome change for many families. 

However, if you’re new to the home-buying process, then you may notice that excitement lower a little as you move forward through the process. The reality is that buying a home can be both complicated and frustrating. Thus the following includes a few things you can do to begin making the process that much easier.

Start Getting Your Documents in Order

This may not be the most exciting part of the home buying experience, but it is perhaps the most important. This is because when you start looking for a home loan, you will be asked to present a number of documents to your lender. 

This includes things such as multiple bank statements, pay stubs, and tax returns, to name a few. Having these documents at the ready can dramatically decrease the time required for you to obtain a loan.

Choose the Right Real Estate Agent

When it comes to the home buying process, who you choose as your real estate agent will determine the speed at which your offers and other paperwork are completed. That is why it is critical that you thoroughly research your real estate agents. 

You want to look for an agent who is understanding of your situation, easily reachable, and knowledgeable of your area’s current real estate market.

Choose a Fixed Rate Mortgage

One of the most critical parts when choosing the type of mortgage you want to obtain is how much you’re going to pay in interest per month. 

Trying to negotiate a lower interest rate with your lender can make the process that much more complicated. That is why it is highly recommended to choose a fixed-rate mortgage. 

A fixed rate mortgage, like that available from companies like Right Trac Financial, provides you with peace of mind that your mortgage amount is not going to drastically fluctuate if interest rates suddenly begin to spike.

Find the Right Home Inspector

No matter how pretty a home looks from the outside, you never know its actual condition until you have a home inspector come and check it out. Choosing the right home inspector can save you time and headaches from unexpected issues that you may come across months after you’ve closed the deal. 

You can find a good home inspector by speaking with tradespeople as they will often be working closely with many home inspectors within their community.

As you can see from the information above, there are several ways you can begin to simplify the home buying process. By implementing one at a time, you can potentially save yourself and your family from having to deal with any frustrating issues down the line.