Have you ever wondered about having your own home? A lot of us might have been planning it already but doesn’t know where to begin. Many people seriously want to purchase a home, but they are not familiar with home loans.
If you are to break it down, there are many different types of mortgage loans. You might even get confused and overwhelmed when you see them. We have the most common ones, the FHA loan, VA home loan in Texas, USDA loan, conventional loan, and many more. Taking the time to learn about them first will give you an advantage in choosing the perfect one for you. You need to realize that the best loan for your friend and colleague may not necessarily be the best for you too. You need to gauge your situation to succeed in your purchase.
There are also essential requirements that every mortgage loan requires. The criteria for these loans may differ from one lender to another, but these four will never go. They are the primary criteria for every credit you will apply for.
A Good Credit Score
The first requirement is your credit. You need to build reasonable confidence to get approval. If you are still developing it or you are trying to fix it, you need to make sure you need to reach at least 580. That is the minimum requirement for the most government-insured loan.
On the other hand, conventional loans often require either 640 or 680, depending on the lender. Your credit history will also get taken into account. You need to make sure that you do not have bad credits over the last seven years. If you have, then ask lenders what you can do with it. One thing is sure, though; you need to show good faith in your payments. Make sure that your monthly payables are paid completely and on time every month so lenders can reconsider you.
A Stable Source of Income
Having a stable job is a primary requirement when taking out a mortgage loan or any other loan for that matter. You need to have at least two years with your current employer to qualify. If not, some lenders allow different employers as long as the industry is the same. You also need to ensure that you have a good employment history and record since it will also be taken into consideration.
A Steady Financial Statement
Your finances will get checked thoroughly, so you need to make sure that you have them in order. Your chosen lender will check your monthly income as well as your expenses. They will also check on your cash flow, so you need to make sure you have no zero balance or negative balance on your bank accounts. Your credit cards should also be in current and good standing.
Required Down Payment
Most of the time, the required down payment is twenty percent of the total cost of the house. Although lenders require less, it is best to go with at least twenty. If you can go higher than twenty then much better since you will have a lower principal balance to pay.