The price of a house often reaches hundreds of thousands of dollars. So, it would be easy to surmise that obtaining a loan for a home purchase is probably a challenging process. Sure, the home loan qualification process is not simple, but there is also plenty of misinformation circulating that have led many people to believe that their dreams of homeownership are unattainable.
Excellent Credit Score
The guidelines vary extensively, but for a person to have an excellent credit score, their score needs to be at least somewhere in high 700s. Unfortunately, much of the population doesn't have scores that reflect this number. Contrary to what some people believe, you do not have to have an excellent credit score to get a home loan. While a higher credit score will generally mean a lower interest rate, some programs allow buyers will lower scores to qualify for a mortgage as well.
Zero Credit Card Debt
If you can pay off all your credit card debt before you apply for a home loan, that's excellent. However, if you can't, you might still be able to proceed with your application. Credit card debt is not necessarily a bad thing; it's excessive debt that is the problem. The general rule is to keep your utilization rating at 30% or below, which means that you're using no more than 30% of your total credit limit. If your credit card debt is managed, you can still be approved for a home loan.
Large Down Payments
Years ago, most people needed to be able to put down at least 20% of the home's value they wanted to buy. For a $250,000 home, that's $50,000. If you do not have this amount available to put down, you can still get approved for a mortgage. Some programs allow you to buy a home with 10% or less to put down, and there are even federally backed programs that allow you to purchase a house with no money down.
Child Support and Student Loans
If you are currently making child support and student loan payments, don't let anyone tell you that these expenses are deal breakers for an approved mortgage. Mortgage companies don't single out debts, they look at the large picture. More specifically, they look at your debt-to-income ratio. If you have enough income to support these payments, your regular expenses, your mortgage, and other homeownership costs, you can be approved for a mortgage. Just make sure you try to keep your other expenses, such as credit card debts, down if you make these payments.
If you have concerns about your ability to be approved for a home loan, enlist the help of a home loan program professional. From credit score assistance to down payment options, these home loan programs can help you get approved for a home.
For more information on home loans, contact a lender near you.