For the average American, buying a loan is only possible by getting access to a good home loan. This means you get a loan provider, most often a bank, to finance your home.
You pay a down payment on the home and get the bank to cover the rest of the amount. You pay the borrowed amount over a specified time period with interest.
Before applying for a home loan, it’s always a good idea to review and improve your financial condition.
Home loans aren’t that difficult to get if you have a good credit score and decent financial position.
Improve Your Chances of Getting a Home Loan
There are a few things you can do to improve your chances of getting a home loan:
Review Your Credit History
Your credit report is made by one of the three major credit bureaus: Experian, TransUnion, and Equifax. Request your credit report from any of these bureaus.
You can request all three for your credit report, just to be on the safe side. If you have a credit score above 600, you won’t have any issues getting a home loan. The higher your score, the better your chances of securing a loan. A score below 500 can be a problem.
We recommend going over your report carefully. Look for errors or misprints. If you find one, you should get it corrected before applying for the loan. For corrections, you can either contact your loan provider or contact the credit bureau.
Give them proof of the error if you have it. Make your case with documents and time frames.
Even if you plan to delay your home loan application, we suggest you keep reviewing your credit history in a timely manner to avoid errors. Errors in credit reports are more common that you might think.
Prepare All Documents
When reviewing the criteria for a home loan, check all document requirements. Compile them beforehand.
You don’t want to delay getting your home loan because your documents were not in order.
Even if some documents are optional, add them to the application. This gives your creditor surety that you are not withholding any information.
It will also make it easier for them to process your loan in a timely manner.
Show That You Can Pay off Your Loan
Your income should be enough to guarantee to your loan provider that you will be able to make the payments on time. This means that you should have a stable income.
If you have switched employment recently, then consider putting off your loan for at least one year. Ideally, you should have to be in the same employment for at least two years to reassure your creditor.
Delay Any Other Loans
If you are going to apply for a home loan, they delay getting any other loan. If you can’t put the other loan off, delay the home loan.
Applying for more than one loan at a time affects your credit history. It raises a red flag for your loan provider. He will wonder how you are going to pay off two loans together.
Some people make the mistake of applying for the same home loan with two different creditors. Don’t do that. In the research phase, you should ideally be looking at 5-6 loan providers.
But during application, narrow down your choice to just one provider. That’s because your loan application will be included in your credit history and might affect your score.
Ask Your Bank First
Your bank knows you. They probably have their own credit report on you. If you believe that your dealings with the bank have been positive, ask your bank first.
If you have a current and savings account with your bank, they will have better trust in you. They have seen you pay your bills on time. They know how much money comes in your account. Your loan will be processed faster that way.
You also have a better chance of negotiating a good offer with your bank than with any other loan provider.
References can come pretty handy if you don’t have an excellent credit score. Sometimes lenders are willing to offer you a home loan if you can give them a guarantee through a reference.
You can get someone to vouch for you who have done past dealings with you. This could be your previous landlord who will vouch that you have always paid your loan on time.
You can also get someone to guarantee your loan for you. This means that in case you are unable to pay your loan, your guarantor will pay for the loan.
It’s not easy finding someone to guarantee your loan for you. Plus, this person should be financially stable and have an excellent credit history to qualify as a guarantor.
Read more on getting an affordable home loan here: https://www.crediful.com/usda-loans/