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10 tips to securing a home loan
Weve only got about one page to list these 10 tips for securing a home loan, so lets jump right into it!
1) Get your credit score up
This is the key rule. Do not even think about getting a home loan until youve paid off your debts and worked your credit score up.
2) Get your credit score up
Seriously! What you should do is settle all your old debts, and then cut up all of your credit cards, but one or two. Use those for simple things like buying gas or grocery shopping and then pay them off on time.
3) Live within your means
Credit cards gave birth to a generation of people buying more than they could afford, with many of them winding up hundreds of thousands of dollars in debt as a result. Your spending money should be cash only.
4) Make sure the time is right
Sadly, were not all ready to own a home. If you dont have savings and a reliable career, if youre already in debt, youll want to improve your financial standing before going after home ownership.
5) Do your research
Basically, get online and do a lot of reading up on the ins and outs of home loans and the real estate market. If you develop a strong knowledge of the market, youre more likely to get what youre after.
6) Know what entices potential lenders
Its more than just having a nice job and a good credit score. Remember, they do background checks. If youve never held a job for more than a year, thats a turn off for lenders. Other things can help, too. If you have multiple sources of income, let the lender know about them.
7) Never borrow more than you think you can pay off
This is how American homebuyers got into so much trouble last year. They were knowingly borrowing more money than they could repay in the hope that home and land prices would forever appreciate.
8) Be willing to shop around
Dont grab the first loan anyone will give you. In getting a low interest rate on a loan or mortgage, youll want to look around and see who can offer you the best deal. You may get lucky, but dont count on the first bank you walk into to give you the best overall deal.
9) Dont buy a pricier house than you need
This is more a tip for actually buying a house than it is for getting a loan, but it can help on that front, too. If youre a bachelor, what on earth are you going to do with a two story, two and a half bathroom house? Dont go overboard in selecting your home and the lender probably wont feel that youre asking for too much.
10) Dont be afraid to ask for help
If you need a real estate agent or some expert advice on securing a home loan, then go for it. A qualified home loan professional might save you a vast sum of money.
Smart Tips for Subprime Loan Borrowers
After submitting a loan application to your chosen lender, you have been informed that you are not qualified for an approval due to a poor credit rating. Obviously, you have submitted your application to a lender that only accepts customers with good credit. Perhaps you thought that your credit rating is good enough to pass. Unfortunately, it wasnt. So, what can you do?
If you really need to acquire a loan due to a financial emergency, then you can look for a lending company that extends loans for people with imperfect credit rating. These lenders are also called subprime lenders and they are more lenient in approving loans compared to other loan providers.
Thus, before submitting a loan application, check your personal credit report and if your credit score is 620 or below, you should look for loans in the subprime category. Nevertheless, some subprime loan companies may take advantage of your situation and charge you with high interest rates and expensive fees. If youre not smart with choosing your lender, you could end up with an unreasonable loan deal.
Listed below are practical tips that are specially intended for people in search for a bad credit loan:
Check your credit report. Order a copy of your report from each of three major credit reporting agencies (Trans Union, Experian and Equifax ) so you can personally check your credit standing. Check your report for errors which can hurt your score even more. In case there are errors, send a letter of dispute to the credit reporting agency that issued your report to have the incorrect items corrected.
Compare bad credit offers. Of course, subprime lenders offer different rates and to find the most reasonable deal, you must spend time comparing your options. Use the internet to check out the available loan programs especially offered for people with bad credit history. Expect subprime loans to have higher interest rates than loans that require good credit. Nevertheless, you should never settle for an unreasonable deal. By investigating your available options, you can be assured that you can choose a bad credit loan with the lowest possible rate.
Carefully evaluate your loan contract. Spend time reading and understanding each and every statement in your loan contract. Check for hidden fees as well. If there are terms or phrases in the document that you do not fully understand, do not hesitate to ask for a clear explanation. If the lender cannot give you a straight and clear answer to your questions, its best to find another.
Improve your credit score. Use your subprime loan to work for improvement. By submitting your monthly loan payments religiously on time, you should be able improve your credit score within six month after your loans approval. Order a copy of your credit report from the three credit bureaus to make sure that you are doing progress. Continue with your good payment habits not only with your lending company but with all your other creditors as well. After a year of consistent payments, you should be able to regain good credit history and refinance your loan to enjoy lower interest.