If you’re planning on buying a home in the near future, you’ve likely looked at potential lenders for your home loan. While you might be saving for a down payment and scouting out your idea neighborhoods, there are more key factors that should be considered in order to secure the best interest rate and guarantee you get approved. In this series of posts, we’ll explore the top factors that affect your ability to get a home loan. Before reading on, be sure to address your insurance needs with a Wright City Home Insurance policy to give you peace of mind in your new place.
This shouldn’t come as a surprise, as everything from renting an apartment to insurance premium rates are reflective of your credit score. According to Free Credit Score, in addition to helping a bank determine whether or not you pose a risk of defaulting on your loan, this three-digit number will also shape the interest rate, terms and conditions for financing your mortgage loan. At least six months before you hit the real estate listings, pull a copy of your credit report and credit score to spy and correct any poor credit behavior and remove inaccurate information.
As the largest loan you’ll likely ever have, a mortgage is a lot of debt to take on. Therefore, banks typically get nervous about other large debts that you might have. Avoid opening new lines of credit and pay down debts before applying for a home loan to prove you won’t be financially overwhelmed.
The more you put down, the less you’ll owe on your mortgage. In addition, the bigger the down payment, the more favorable terms you’ll achieve on your loan. Most lenders require 20% down, but other options are available. For example, you can choose to put down less and get a mortgage insurance policy, as well. Speak with your lender to view your options.
Credit scores and debt show how responsible you are with your finances, and employment history shows how stable you are in your career. The more stability you have, the more favorable you become to lenders.
About Sine Insurance Group
At Sine Insurance Group, we want to ensure that your belongings and your dwelling are protected. Our custom-tailored rental insurance policies are crafted specifically to meet your needs and provide peace of mind. For more information about our products, contact us today at (636) 947-1177.