As soon as I realized that my personal financial picture was a little bleak, I started thinking about taking out a personal loan. I wasn't really looking forward to going into debt, but I knew that if I wanted to solve a few short-term problems, a loan would be the way to go. I talked with a few of my local financial institutions to get a good idea of what they could offer me, and then I sat down to go over the paperwork. It was incredible to see how much money I could save by securing a lower interest rate. Check out my blog for more information about loans.
Looking to buy a home? If so, then you'll likely need to get approved for a mortgage. Before you start submitting mortgage applications, however, it's important to be aware of some of the major factors that can influence your ability to get approved for the home of your dreams.
Credit Score
One of the main determining factors when getting approved for a home loan is your credit score and credit history. Credit scores typically range anywhere from 500 to about 850, with anything over 700 considered to be pretty good. If you have a credit score below 700, you may have a harder time getting approved for a loan, or you may end up with a higher interest loan.
Type of Loan
The specific type of loan for which you're applying can have an affect as well. FHA loans, for example, are designed for first-time buyers who don't have the "typical" 20% set aside for a down payment. FHA loans also tend to have less stringent requirements when it comes to credit scores and only require buyers to place a minimum of 3.5% down. For some loans, such as VA loans, members of the military can easily get approved for a home loan with 0% down.
Approval Conditions
In some cases, a mortgage company may even give you approval for a home loan that is contingent on something else occurring. For example, if you currently own a home, your lender may not give you more money for another home loan until you successfully sell your existing home. This will be noted in your pre-approval letter if this situation will apply to you.
Home Appraisal
Finally, with most types of home loans, an appraisal will also be required to be done on the home before the loan money will be distributed. The home will need to be appraised for at least as much as the mortgage company is lending you. For example, if you agree to buy a home for $200,000 but it only appraises for $175,000, your mortgage company isn't going to give you more than $175,000. If this occurs, the seller of the home will either have to sell for the appraisal price or the deal will fall through.
These are just a few determining factors to keep in mind when applying for home loans. By doing so, you can be better prepared for any issues that may come up throughout the home-buying process
Share30 May 2017
