Do I Qualify For a Home Loan

By: EconomyWatch Content   Date: 14 December 2009

About The Author

EconomyWatch Content

Follow The Money

EconomyWatch, Content Team

 

  • Dot Div
  •      

‘Do I qualify for a home loan’ is a common query with those who plan to buy a house for the first time. After all, many factors need to be considered such as preparing and getting the paperwork in order. Another crucial factor is to ensure that your finances are in order.

 

According to the Internal Revenue Sources (IRS), a first-time home buyer is a person who pays regular taxes and has not owned a home in a period of three years prior to the buying date.

Do I Qualify For a Home Loan: Preparation

Planning is the key to buy a home successfully but the process is smooth only if you have all the required documents and a pool of cash ready. It helps to save a lot of unnecessary expenses and hassles for you, the loan agency and realtor at one go.

 

To qualify as a first-time home mortgage, get a pre-qualification letter. This letter assures the lender about the limit of the loan amount that you are qualified to borrow based on:

  • your monthly income
  • income to debt ratio
  • credit score

 

One can also qualify by obtaining a pre-approval letter that contains your employment status, debt ratio and credit references. This provides your lender with an in-depth analysis of your financial situation.

 

Do I Qualify For a Home Loan: Budgeting

It is important to buy a house that you can afford. This is because an expensive house will involve more monthly payments.

 

Also, you may have to spend on:

  • mortgage payment
  • maintenance cost
  • mortgage insurance
  • utilities
  • home owner’s insurance
  • property tax

Do I Qualify For a Home Loan: Documentation

Getting all the documents in order is not easy. Get a copy of your credit report from credit reporting agencies and file complaints for errors, if any.

 

Other essential documents include:

 

  • Copies of checking and savings account statements for the last six months.
  • Copies of investments, such as stocks and retirement accounts.
  • Paycheck stubs.
  • List of credit cards including balances and monthly payments.
  • Other outstanding debts, such as car loans.
  • Copies of income tax returns spanning the previous two years.

 

You can secure a lower mortgage interest rate and a lower monthly payment by making a higher down payment. It may even prevent the need of private mortgage insurance.

 

  • Dot Div
  •      

Most Popular in Home Loans

Related Links
blog comments powered by Disqus