As the housing market continues to boom, more and more people are interested in getting into a new home. Starting the process of getting a mortgage can be a daunting task. Getting pre-approved for a loan is a common part of the home buying process. Once you are pre-approved for a loan, half the battle has been won. But, getting to this point can take some doing. The following are some barriers to achieving this goal that you should be aware of so you can address them on your journey to getting a mortgage and getting into a new home.
Cleaning up your credit
When seeking to finance a new home, your credit can be one of the biggest barriers to your obtaining a house. If you have unpaid debts, slow pays, charge-offs and other negative items on your credit report, you will need to fix these items to ensure that the pre-approval process for your home loan will go through without any problems. Low credit can also lead to higher mortgage rates. If you have issues here, you may need to speak with a mortgage service that can help you understand what items need to be addressed on your credit report.
The income that you are generating is another key factor in getting pre-approved for a loan. A lending institution does not want to create a loan that they are fairly certain you will not be able to pay back. When getting your finances in order, before loan pre-approval, you will want to be sure you can demonstrate a history of consistent, solid earnings. Inconsistent earnings and gaps in earnings can be a huge red flag to a lending company.
The dreaded down payment
When you get preapproved for a loan to apply to the purchase of a new home, this loan amount will typically not cover the entire cost of the house you are purchasing. The down payment you will be responsible for paying out of pocket depends on the total asking price of the home. It is the down payment that prevents a lot of home buyers from being able to move forward with the purchase of their new home.
There are a just a few of the common barriers to getting a mortgage and buying a home. However, with the right help and some patience, you will find yourself in the home you’ve always wanted.