Home Loan Advice: Four Things to Check Before Applying for One

Home Loan Advice: Four Things to Check Before Applying for One

Credit History

Most home loan advice sites advise that before you go run to your nearest lender for a home loan, you need to check if you got the credit history necessary to back you up. A clean and attractive credit history isn't just for show, and clean records with your financial dealings would ensure great home loan deals with better rates. One way to measure how good you're doing with your credit score is to evaluate even in a general way your debt-to-income ratio. This is the balance of your income against your debts. The lower this ratio is, the better your current credit score. Of course, past billing statements from your banks can serve as resources for your credit history assessment of your self. To better maintain your current credit standing if you've determined that you got a good score going, is to not open lines of credit and not to close active accounts. Opening lines of credit like a credit card account would affect your score negatively, plus it gives an avenue for cashless spending in a time when you don't have too much spending moneyit's a temptation you can do better without. Closing active accounts would affect your credit score by eliminating one of the accounts that contributed to your current score in the first place. Keeping these accounts open would maintain what score you already have.

Employment History

Most lenders prefer that you've stayed with your current employer at the time of application for a home loan for at east two years. This is preferable, but not really a requirement. This tells the lender that you can stay with a professional relationship for long and that you probably will stay with the same employer (and thus maintain your financial standing) for longer. Of course, after getting the loan, endeavor to NOT change jobs or quit, as this would adversely affect your financial capabilities and thus your mortgage repayments.

Lender

One clear rule about choosing a lender is remembering three things: reputable, trusted, and reliable. Simple as that. You can do background searches on the internet for some feedback regarding your preferred lenders.

Interest Rates

There are two types of interest rates: fixed and adjustable. Fixed rate mortgages are easy enough o understandthey stay the same throughout your repayment years and up to the time of the loan's maturity. Adjustable rates are the ones a bit harder to understand. In general, these rates fluctuate according to political, financial, and economic data at any given time. So it can go up during economic turmoil, or down in favorable political and financial conditions. Generally, it's advisable to get fixed rate mortgages if you intend to stay in the home you're getting the loan for for the rest of your life. Otherwise, if you plan on moving on to a different home, then adjustable rate of interest is ideal.

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