Getting a home loan for a custom-built home, especially as a new home buyer may be the most difficult thing you will do in your lifetime. The odds against the first home buyer can be very high and you need to do everything possible to convince your prospective buyers to approve your mortgage home loan. The following are some of the most essential tips that can help you;
Save Some Cash
Perhaps the first step you should take to secure a loan for a custom-built home is to save some cash up-front. Walking into the office of a potential lender such as a bank, with zero cash will likely lead to a rejection of your mortgage loan application. Before the loan, mortgage loan lenders used to approve zero cash-down mortgage loans, but the requirements have changed over the years. Depending on the lender, you may need between 3.5 and 20% down payment on your mortgage to qualify for a loan.
Pay Down Existing Debt and Avoid New Ones
Another way you can get an approval for a mortgage loan very fast is to owe much less. You don’t need a zero-credit balance on your credit cards to qualify for a mortgage loan but when lenders see your commitment towards the completion of debt repayment, your chances of securing a mortgage loan is higher. Lenders will compare your debt-to-income ratio before approving the mortgage loan. If your entire monthly debt payment is less than 40% of your regular income, then your chances of securing the mortgage loan are higher.
Get a Pre-Approval for Mortgage Loan
Lenders believe that getting a pre-approval for a mortgage loan is quite emotional and also shows your financial stability. To get pre-approval simply contact a mortgage lender and submit your personal and financial information and wait for a response. The pre-approval includes how much you can afford and the interest rates you will pay on the loan. You should consider doing this with many potential lenders before settling for one.
Know What You Can Afford
Don’t get carried away by the beauty and location of certain homes, don’t apply for a loan you cant afford. Once you get a letter of pre-approval from your potential lender, simply choose a home that fits within your budget. Lenders should not dictate how much you should spend on a mortgage loan, hence you need to be smart about your final decision.
Increase Your Credit Score
It takes few minutes to pull your credit score out online, hence you should try and find out if there has been a credit fraud on your credit because such issues can halt your chances of getting your mortgage loan approved.
Don’t get discouraged if after applying all these and ideas, you still didn’t get your first mortgage loan approval. Make sure you begin implementing a realistic plan to rise above credit problems and other issues that are reducing your chances of securing a mortgage loan. You may want to wait for a little to repay some of your debt before making a fresh mortgage loan application.