|
How To Qualify For A Home Mortgage Loan
By: Jeff Slokum
Are you considering applying for a mortgage loan to purchase your first home? If
so, you should read the following tips below that will make the process easier!
If You Have a Good Credit History It Is Easier To Qualify For a Mortgage
By far the easiest way to qualify for a home mortgage loan is by establishing a
good credit history. To establish a good credit history you need to be able to
demonstrate responsible repayment of smaller loans, such as credit cards and car
loans. The building of your credit history begins the day that you put the very
first debt into your own name. For many Americans, this is at the age of
eighteen.
Have a good solid credit history, shows the home mortgage lender that you take
financial responsibility seriously. This makes you, what the lender terms, a low
risk borrower. That is to say that you as a borrowers are a relatively low risk
in comparison to other borrowers.
In return for your good credit history, the lender will approve your home
mortgage loan application. In addition, he will offer you a lower interest rate
on the loan than would be offered to other borrowers who are classified as high
risk.
However, if your credit history is not as strong as you would like, that doesn’t
mean that you will have to give up on getting a home mortgage loan. There are
other things that you can do to increase your chances for mortgage approval.
Save a Sizeable Down Payment
Having a substantial down payment on the home that you wish to purchase and
applying for a smaller home mortgage loan is another way to increase your
chances of getting mortgage approval. Again, this goes back to the risk involved
to the lender for financing your loan.
Many mortgage lenders will require that you have a 20% down payment on the home,
and then they will grant mortgage loan approval for the remaining 80% of the
purchase cost. This helps to offset the lender risk. In the event that you are
unable to keep up with monthly mortgage payments and you default on the loan,
the lender will have a better chance of recovering his money through foreclosing
on and selling the home if the loan is a smaller percentage of the market value
of the home.
Therefore, if you can save 30% or more towards a down payment on your home, you
will be lowering the risk to the lender and increasing your chances of getting
mortgage approval.
You May Have To Accept a Higher Interest Rate on Your Mortgage Loan
If you wish to secure a mortgage despite your bad credit history, and you do not
have a sizeable down payment saved up, you may have to agree to a mortgage at a
higher interest rate than that which is being offered to low risk borrowers.
This is because the lender will want to be compensated for his increased risk
level.
This should not necessarily prevent you from taking the loan, though. If you
secure the mortgage and are diligent about making timely payments, after paying
on it for awhile you will improve your credit history. Then you can refinance
the mortgage at a later date with a better rate offer.
About the Author:
This article provided courtesy of http://www.2nd-mortgage-guide.com |
