If you are considering buying a house you need to start planning ahead of time to be ready for the mortgage process. Many people fail to understand how long it can take, especially for first-time home buyers, so they become frustrated when they need to wait longer than they anticipated. Here are some things you need to know about getting a home loan.
1. Student Loans Need To Be on A Certain Payment Plan
If you have student loans through the government, you may need to change the payment plan that you are on before you can get a home loan. This is because the loans have to show up on your credit report in a certain way. For instance, if you are on an income driven repayment plan, meaning that they calculate how much you owe each month based off how much you make and your family size, you may have problems with the home loan. The goal is to get on a plan that can give you a fixed amount for about 12-24 months so that the mortgage lenders know what to plan on. You can always go back to a certain plan after you get into the house, but your credit report has to show a certain payment.
2. You Will Show Your Bank Account
Another thing that some people are surprised to learn is that you will have to show them your bank statements and bank records. This is because they want to see your savings, how you spend you money, and if you can afford the house. Additionally, they need to see that you can afford the down payment that you are claiming to pay. If you say you will put down 20% they need to see where that money is coming from. Thus, prepare your bank statements months in advance by watching your spending, saving as much as you can, and being careful with your money.
3. Your Credit Score Will Determine Your Interest Rate
Your credit score will play an important role in your home loan. If your credit is poor it will mean that you will pay more money each month in interest on the loan. You cannot raise your credit score in just a couple of weeks, it will take months, and even years in some cases to bring the score up. So the earlier you start caring for your score, the better off you will be.
By doing these simple things you can prepare yourself for a home loan.
Share17 March 2017
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