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By Chris Rocks
What is important to lenders?
Not every applicant is approved for a home loan the first time he or she
applies. For a variety of reasons, even after a lot of hard work, sometimes a
loan just can’t be approved. It may have to do with the applicant’s credit or
savings history, employment stability, debt structure, or the value of the
home. The good news is that a denial is merely a detour, not a roadblock.
Purchasing a home takes planning, discipline and hard work! Follow these tips
and with our assistance, homeownership is not out of reach.
Establish a consistent record of paying bills on time.
Before making a loan the size of a home loan, most lenders will want to review
how you have handled your credit in the past. This includes all credit
accounts, including utilities, revolving debt (credit cards, etc.), and
installment debt (car loans, student loans, etc.). It is critical for you to
bring all overdue bills up to date immediately and begin paying them on time
in a consistent manner.
Establish a consistent record of steady employment.
Lenders are more likely to look favorably on an applicant who has been in the
same (or similar) line of work for generally two or more years. If you have
been working steadily for less than two or more years, expect the lender to
ask why. There are many acceptable reasons, including: You recently finished
school, vocational training, or left the military; Your work is typically
seasonal and gaps in employment are customary to the industry You may have
been laid off from your job; or Frequent employment changes are normal in
your line of work (sales, contract work, etc.), but you have been
consistently employed and maintained a consistent level of income over the
past 2 years.
You may want to pay off some debt to lower your debt-to-income ratio.
This step will make it easier to qualify for a mortgage loan if your debt
ratio is high. Chances are good that if you’re already paying rent, making a
mortgage payment will be a smooth transition. Along with the mortgage
payment, you’re also responsible for real estate taxes and insurance, and if
required, mortgage insurance and homeowners dues. Work with us to determine
the monthly payment you can afford based on your income and the standard debt-
to-income ratio guidelines.
Establish a consistent savings pattern.
Saving money for a down payment, and still having enough reserves left over to
cover two months of expenses in the event of an emergency, is typically the
most challenging part of buying a home. While sometimes it is difficult, this
is a necessary step to ensure you are financially ready to take the plunge
into homeownership.
Chris Rocks is a Mortgage Consultant specializing in working with First Time
Home Buyers. FirstHomeTips.com (http://FirstHomeTips.com), a site designed by
Chris, was created to help make the home buying process less complicated and
less stressful for the first time buyer.
Website URL: http://www.firsthometips.com (http://www.firsthometips.com)
Contact Email Address: chris@firsthometips.com (mailto:chris@firsthometips.
com)
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