Shopping for a new home is an exhilarating experience and frustrating if you cannot find the right one. But the entire process of looking at the houses, deciding on the things you need to add in the home is an exciting one. One important process in buying a home that everyone finds stressful is getting the loan needed. Loan approval is a lengthy and niggling process that needs quite a bit of maneuvering on your part and lots of patience as well. Here are some of the top issues you need to face while applying for a loan.
You need to first assess your financial situation and arrive at an estimated amount of money you can pay towards the mortgage every month. There are some who find it hard to qualify for the loan as poor credit situation is not favored by many lenders. There are others who get a pre-approved loan, which is well above what they can actually afford. The best way to handle this is plan a proper budget, so the lender will look over your finances and know what your expenses are. The bank may offer a loan that is appropriate instead of one which is too much for you to pay back on monthly basis.
Deciding on Mortgage
Since the interest rates on mortgage fluctuate with market movement, you need to decide quickly on it when the numbers are favorable to avoid higher interest rates. Refinancing at a reduced interest rate is another option that many homeowners fail to capitalize on. This should be utilized more. The increased competition in home buying sector has led to the birth of competitive interest rates. Buyers can shop for the right deal by concentrating on other aspects than just the loan interest rate.
Mortgage Loan Approval
For moving to a new house, you need to get your loan approved without any hitches. To accomplish this you need to consider the following things.
- Avoid making any big purchases before the loan is approved. Lining up all the necessary things for the deal will not make it a permanent one. If you buy a car or other such big expenses, banks look at it as increased debt for the buyer and more risk for them. Similarly cash deals too should be avoided.
- Making any major career moves is also not advised at this stage as it affects your stability factor and increases risks for the bank that may end in loan refusal.
- Lenders and banks do not stop with the first credit check. They also do one just before they close the loan. If you have missed any payments on your credit card or a loan payment, it can cause big trouble. Application for new credit card also could bring down your credit rate and put your loan approval at risk.
Another important factor that homeowners should be careful about is not putting down most of their money in the down payment for the mortgage. This will leave very little for the closing amount which can be as big as 3% and also subject to change any time.
James Harris helps you prepare a checklist, before you decide on financing for a new home. He reminds you about the type of loan you should choose which is as vital as moving into a new house.