Buying a home of our own is one of the biggest motivations for many of us to work hard and save money. Buying a home is indeed a big deal for any person of any age. Moreover, if you are planning to buy your first home, the anxiety is certain to be increased. The home buying is indeed a quite lengthy process which contains a number of steps. Once you finalise a property, the next and the most crucial step of the home buying process is to get qualified for the home loan.
A home loan is not just credit but can be taken as a commitment. The home loans generally are loans of a quite large amount and the repayment of the same continues of decades. Hence the home loan providers become much stringent on approving home loans.
Being a home loan seeker, it is advised to take some preparatory steps. In order to get qualified for a home loan, one should do some homework so that a smooth approval on the loan can be received.
Tips to Get Qualified For a Home Loan at the First Time
Know Your Credit Score
The credit score is a numeric expression provided by the credit bureaus to each individual. The credit score ranges from 300 to 900. The credit score is determined by the previous credit history and repayment habits of a person. A high credit score denotes more creditworthiness of an individual. To get a loan, the credit score of the applicant must be 750 or above. Prior to applying for a home loan, it is advisable to check the credit score and if it is less than the prescribed one, you should enhance it before you knock the door of the home loan provider.
Make Your Credit Report Error Free
Along with the credit score, the credit bureaus also do provide a credit report which reflects the previous credit transaction of an individual. The credit bureaus update the credit report from time to time. Before you apply for a home loan, it will be safe to check your credit report too. Checking the credit report will ensure the update of the credit report. If you find any of the flaws in your credit report, you can report it to the credit bureaus for updating it. Along with the credit score, the lenders do check the credit report too, hence keeping it free from errors in a must-have.
One of the best ways to be assured of the home loan is getting pre-approved for the home loan. With the help of pre-approved home loans, one can be assured of the maximum amount of his/her home loan. Once you are sure about your budget, it becomes easier to find a home. Moreover, if you have a pre-approved home loan, the loan disbursement can be done within a day or two.
Find Your FOIR
Along with the credit score, the lenders always take the FOIR into consideration. The FOIR stands for Fixed-Obligation-to-Income which is a ratio of net monthly income and the total payable of all the loans. If the ratio is 50 or more, the lenders generally reject the application. So before you apply for a loan, you should check the same. If your FOIR is 50 or above, it is better to close a loan or pay credit card due so that ratio decreases.
Be Prepared to Pay the Down Payment
The home loans never cover the entire amount of the property you want to purchase. The maximum amount one can get from a home loan is 80%-85% of the property price. In such a scenario, one has to take the responsibility to pay the rest of the property price by himself. The down payment of a home loan is a quite big amount hence one should be prepared in advance. The down payment amount of the property depends on the price of the property and the amount you are getting from the home loan.
Make Budget for All Homeownership Costs
The property price is not the only expense that a home buyer has to bear while purchasing a home. There are many additional expenses you are to bear which will not be included in the home loan. Apart from the property price, the home buyer has to pay the registration fee, stamp duty charges, paying charges to municipality etc. So while making a budget for a home purchase, all those expenses are to bring into consideration.
The Last Lines
A home buying is not just adding one more property to your asset list. Home has many emotional values such as the sense of security, feeling of pride, the stability and so on. So step ahead and plan to own the home of your dreams. But be assured that the excitement of buying the first home should not make you oversee the preparation for the home loan. So be prepared and know all the home loan details so that you can experience a seamless home buying process.