Many new home buyers may think they don’t qualify for a home loan because they have bad credit or don’t have enough money saved to put 20 percent on a home. However, you can still get approved for a mortgage. Here are some guidelines for what mortgage lenders use to approve a loan.
Job history: You need about two years of work history to qualify for a home loan. This does not necessarily have to be with the same company, as long as you are working. It is useful if you have stayed with the same company or at least within the same industry.
Credit history: You must have been in debt for the lender to judge you based on your payment history. You must have a bank account and a credit card. If you don’t have credit, start with a secured credit card that allows you to prepay money on a card and then use it. Also, there are credit cards available for those who have no credit or bad credit; however, keep in mind that these may have a higher APR, which means you will pay more interest. Generally, department store cards will approve those that do not have credit for a credit card.
If you have bad credit, you should start rebuilding your credit. Pay for all collections if possible. Get a department store card and put small amounts on the card and pay slowly. As long as you don’t have a recent bankruptcy or foreclosure, you may still be eligible for a home loan. There are several loan programs for people with bad credit.
In addition to credit cards, you can also establish a good repayment history by paying your rent on time. Set up utilities in your name (or cable, internet, or phone bills) and pay on time, too. Although these accounts won’t appear on your credit report, they can establish you as someone who pays your bills on time.
SavingsAlthough you don’t need to save thousands of dollars for a home loan, you do need to have some savings. You may only have to put 3.5% on a home if you use an FHA loan. However, lenders like to see three to six months of savings to cover mortgage expenses if you unexpectedly lose your job or have an unforeseen financial burden. You generally have to pay the costs associated with a loan, such as escrow fees, title fees, loan officer fees, realtor fees, and closing costs. A fixed number is not required, but lenders generally favor those who have savings for the down payment and money left over after the loan is closed. Generally, it is better to have more money in the bank than to apply it all to a large down payment with little excess.
It is best to first pre-qualify with a mortgage lender to determine if you are eligible for a loan and to determine your loan limit. A loan officer can help you with ideas on how to improve your credit and other ways to strengthen your position. Your Southern Utah Mortgage Lender [http://www.keepitinhouse.com] You can also explore your loan program options based on your circumstances.
