Getting a home loan is exciting because it means one of three things. One is that you will be moving into your new home soon. Very soon. The other may be that you will pay off the previous home loan with higher interest rates. The third reason getting a home loan may be so exhilarating is that you are getting a cash-out loan to pay off some debts and add that deck to the backyard you have been wanting.
No matter what the reason is, you need to keep 10 things in mind. You should do some things, and others you don’t want to, so pay close attention when reading.
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- DO – Check your credit score and make any improvements that you can. Even if you recently checked it for another loan, you want to verify that nothing has changed. Things on your credit score can change quickly, so never assume it will be the same as it was a year ago.
- DON’T – Never apply for a home loan if you have doubts about your finances. If there is a chance that you may not be able to pay it back in a couple of months, you do not want to apply for one. Make absolutely sure that you are financially set to take on a home loan before you even consider it.
- DO – You will want to apply for pre-approval once you are sure that you want to move forward with getting a mortgage loan. This step is essential because it tells you if you can qualify for a loan and how much you can expect to get. This helps you when shopping for a house because you will have a limit you can go up to.
- DON’T – You never want to change jobs before applying for a home loan, even if it is a step up. The lenders will be looking for a record that shows you are stable. To them, jumping jobs means that you are not a reasonable risk because the newest people in a job are the first to be laid off. If you have seniority on a job, you are better off, even if it does not pay as well. You can always find the best home loan and then take a new position.
- DO – Compare all your options. You will want to go online and find a good comparison site, such as the one at iSelect, and let them do all the hard work for you. Their platform will take some information from you and then match you with some of their partners willing to work with you. All you need to do is go through the list of offers and pick the one that catches your fancy.
- DON’T – Did you forget to save some funds for the closing costs? Hopefully, you do not forget about these amounts because it would be a shame to go through the trouble of getting a loan, finding a house, and then having to back out of it because you cannot pay the costs associated with closing on a home.
- DO – You will want to enlist the help of a licensed broker or a great real estate agent. They know all the ropes and hoops you will need to jump through. It is best if the representative lives in the area you are considering or at least close. They must know where to direct you to find the best sites that fit you and your lifestyle.
- DON’T – You do not want to ever lie on an application. Always tell the truth about your circumstances and your financial numbers. It may appear a good idea to bump your earnings amount up a little, but all that does is show the lender that you have lied on your applications because they will check. Be honest and straightforward throughout the process.
- DO – Always stay current with your monthly bills and revolving debt. It is essential to show the lender that you can make your payments on time. If you can, make extra payments on loans and credit cards to help lower your risk numbers.
- DON’T – Avoid making large purchases before you attempt to get a home loan, especially things like new cars or expensive jewelry. If you open a revolving account directly before you expect to get a house loan, it may backfire on you because it does not look good to the lender when you do such a thing.
That is about all that there is to it. There are 5 do’s and 5 don’ts, so make sure you understand which are which. The main thing to remember is that you need to take a step back and place yourself in the shoes of a lender. Someone that has no idea who you are, which means they will go by the numbers that they can prove, and the information that they can verify. Think like them, and you will get the home loan that you want.
