Buying a home is the American dream. It is a large task to hunt for the perfect location, price range and amenities. Making a major purchase like this is one you should plan carefully and judiciously.
One thing you should also give some time and serious thought to is securing your home mortgage. It makes sense to research the lending requirements at several institutions and then compare your options. Qualifying for a loan is a big hurdle but you can make it easier on yourself when applying for a home loan if you avoid these 4 mistakes.
Keep Your Credit Score Strong
A good score means your FICO score is 650 or higher. This will help you to secure a conventional mortgage with a good interest rate. You can proactively plan for this by always paying your bills, credit cards and rent on time. If a banking institution sees a consistent pattern of on-time payments over a period of years it will bode well for you. This thought process should also apply to student loan payments too. They are part of your credit history and can swing a mortgage loan in your favor if they have been paid consistently on time.
Have a good Buying History Prior to Applying for a Mortgage
This is where you should take it easy with making big purchases like cars, boats or other luxury goods that you buy on credit. You want to work hard on keeping your debt-to-income ratios at about 40% to qualify for a loan. Adding big purchases and increasing your monthly debts close to the time that you are applying for a loan can be a big mistake. Restrain from these large purchases as much as possible when thinking about a home mortgage.
Maintain a Consistent Job History that Shows Longevity
Banks and lending institutions are looking for an even and consistent income history. Moving around from job to job oftentimes sets up a red flag for lenders. They want to see stability with a pattern of holding a job for at least two or three years. This does not mean you can’t move up within a company. Job growth and income increases at your job are good for your credit.
Have a Down Payment
The reality of buying a house is that you must have a down payment. Traditionally the down payment is between 10% and 20% of your home costs. The larger your down payment can be, shows the bank that you are a smaller risk to them as a borrower. It may enable you to secure a lower interest rate which will mean savings of thousands of dollars over the life time of your mortgage loan. It also may exempt you from having to get Private Mortgage Insurance or PMI. For an individual who does not have a down payment, a government backed FHA loan, a USDA loan or VA loan may allow you to make a low down payment. Check to see if you may be able to take advantage of one of these programs.
Building a House in Southern New Hampshire
If your home ownership dreams include a newly constructed house make sure you find a reputable construction company. Beote Construction has been building quality homes, duplexes and multi-family projects for many years. Contact them about one of their new condominium or home developments in southern New Hampshire.