Are you getting ready to apply for your first home loan? If so, you’ll want to make sure you’re aware of all of the necessary precautions and preventive measures to take before applying for a home loan. You don’t want potential problems like appraisals and surveys to arise after your loan application has been accepted and you get ready for settlement. Read on to get home loan tips that will set you up for financial success.
The Type of Interest Rate
The choice of interest rate is pretty straightforward. With a fixed rate, you know the rate you’ll be paying for your mortgage loan. And with a fixed-rate mortgage, your payments aren’t likely to change for the entire length of your home loan. A floating-rate loan, on the other hand, allows you to save now on your monthly payment by choosing a slightly lower rate at present in exchange for a rate that may fluctuate over the duration of your loan.
Shop Around for Different Rates
The best way to find out the lowest interest rate is to compare rates offered on new loans. Compare all major lenders, and don’t forget to look at the ‘bottom line’ cost (the all-in costs, rather than just loan interest rates) and some of the smaller lenders who may not advertise heavily.
Examine Your Credit Score
Your credit score can impact how much money can be borrowed for a home loan. Using an online tool like Experian, Equifax, or TransUnion can help you check your credit score without adversely affecting it by doing things like paying bills late or missing payments.
Check the Eligibility Criteria
Prior to applying for a home loan, it’s important that you know what your lender will be expecting of you. Not every lender has the same home loan eligibility criteria, and most lenders set different standards with regard to debt to income ratios and minimum credit scores. Understand the home loan eligibility criteria, provide your employment history, prove suitable income, show proof of residency, and ensure your down payment is enough for the amount you borrow.
If you are a first-time homebuyer with no credit history, the most important thing is to make sure you have a good income and a solid employment history. No matter what type of employment you’ve had, you can show evidence of your past two years’ income and your debt payments to your lender.