For many people, a major part of the American dream is buying a home of their own. In fact, statistics show that nearly 63.4% of Americans own their homes. Home ownership gives you the freedom to renovate and decorate as you choose. Unfortunately, not many people have hundreds of thousands of dollars waiting to be spent. Therefore, many people must obtain mortgages or home loans in order to purchase the property of their dreams. In this post, you’ll learn how to increase your likelihood of obtaining a mortgage.
What Increases Your Likelihood of Obtaining a Loan
If you’ve never purchased a house, applying for a home loan can seem overwhelming. Before visiting community banks in your area, it’s wise to learn what makes a home loan application stand out. In turn, you’ll be able to rest assured that you know what lenders are looking for. Considering that, here’s what lenders typically look for from home loan applicants.
Two or More Years of Employment
Lenders help make investments on the behalf of a bank each day. With that in mind, it’s important that these lenders are making wise investment choices. Considering that, many banks prefer that someone has a steady history of employment. Two or more years of employment look great on a home loan application, especially if your tenure has been with the same company. Having some type of proof of employment shows lenders that you have a history of steady income.
A Stable Credit History
Another important element in determining whether people can obtain mortgages involves their credit scores. Lenders don’t expect applicants to have a flawless credit history. However, those with higher credit scores are seen as less of a risk than others with lower scores. Fortunately, interest rates are typically categorized by credit score ranges. If you’re not quite ready to begin applying for home loans, it’s wise to find out what your credit score is. Taking a few small steps could bump your credit score into a higher bracket which means paying less interest.
Understandably, lenders want to know the financial history of who they’re potentially giving money to. They certainly don’t want to lend out money to anyone who isn’t filing or paying their taxes. Therefore, expect to be asked to bring in a few years of tax returns. This helps to give lenders more information about your income and expenses throughout the year.
Your Down Payment Amount
It can begin to feel like many aspects of a home loan application are out of your control. Fortunately, your chance to obtain a home increases if you’re able to provide a sizable down payment. Throughout your life, you’ve likely been taught the importance of saving your money. There’s almost nothing better to a lender than receiving a payment on a loan right away. The more of a down payment you’re able to bring, the less of a risk you are to a lender.
To summarize, there are several important factors that affect your chances of obtaining a mortgage. Learning about these factors is important, as mortgages allow people to purchase homes. It makes sense to want to know where you stand in regards to obtaining a mortgage. In order to solve this problem, consider visiting a local community bank. This allows you to speak with professionals that keep up with mortgage rates, allowing you to receive the best possible loan terms.