Some Common Home Mortgage Loan Mistakes

Most Americans dream of owning their own home. This is an innate desire that many of us nourish. Even after witnessing the 2008 housing industry crash that led to millions of foreclosed homes, the big American Dream lives on. Owning one’s own home is a deeply emotional matter and everyone deserves to see this dream turn into a reality.

The journey to home ownership may be a very emotional one, but it is full of financial implications as well. A lot is at stake apart from one’s emotions and finances, especially for those who have decided to buy their first home, the process can be very challenging.

Getting a mortgage loan for your first home is not easy. It can be complicated and time consuming, and is one of the most important steps towards the dream of ownership. Ample planning and preparing beforehand can make the process much smoother and faster. Let us see some of the common mistakes that first-time homebuyers end up making.

Overlooking the credit scores

Before applying for a home mortgage loan, check your credit scores. A low credit score can hit your mortgage interest rate, or worst, keep you away from the loan itself! Take steps to improve your credit score at least 6-8 months before you start looking for a home loan.

A new credit along with the mortgage

During the mortgage-application process, avoid taking out any additional credit such as an auto loan or a new credit card. It would increase your liability and lessen your eligibility for a mortgage loan. Even the most affordable home mortgage loans will be hard to fulfill if your liabilities keep on increasing.

Not weighing the total housing payment

It is important to factor in expenses such as principal, interest, taxes and insurance into a mortgage payment. All these expenses must be included while estimating the total housing cost.

Not getting your assets seasoned

Lenders as well as banks want to be reassured that borrowers can make regular monthly payments. Unless your bank statements show that you have had sufficient money in your account for months, they might not be convinced.

Changing  jobs

A steady income from stable employment is another key to obtaining a home mortgage loan. Underwriters check if you have a stable income and job. Avoid job-hopping before applying for a loan. A career change should be out of the question.

Not getting pre-approved

Before applying for a home mortgage loan, make sure you are pre-approved for one. This is like a written commitment from the lenders that will tell the sellers that you are serious about buying a home.

Not looking for lending options

Shop around and check for lenders that offer the best and most affordable home mortgage loan to you. Comparison-shopping is the key to the best mortgage rate.

Not understanding your loan documents

Last but not least, it is the borrower’s responsibility to read and understand the terms and conditions in the loan document. It may be time consuming, but it’s better than signing up for something you do not agree to.
Avoiding the above mistakes can make your journey to home ownership much smoother and hassle free. Additionally, partnering with professional lenders can help first time home-buyers a lot.

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Revive Your Home Ownership Dream through the Back to Work Program

It is every American’s dream to own a home. That is why people have been flocking to lenders seeking to be given a mortgage. However, recent foreclosures have made the prospect so scary. First timers are afraid of trying while prior owners are yet to recover from the shock of losing the only homes they ever owned. Before gaining an understanding of where this fear comes from, it is important that you understand what it takes to qualify for a mortgage.

When you make an application, your lender will scrutinize it thoroughly. The aim is to find out about your sources of income and overall expenditure on a month by month basis. Eventually, your lender will be able to compute the amount you will be expected to pay every month for the entire period of the mortgage. Other things that will come under focus include college loans, car loan and other debts. Once the lender has a clear picture of your income and expenditure, it becomes clear whether you qualify or not.

There are numerous other issues involved. Once you get the final approval, the property seller is paid and you take occupancy. Along the way, you could end up losing your job owing to a number of reasons such as redundancy, illness or economic recession. This renders you incapable of meeting your monthly mortgage payments. Eventually, the lender takes away the house. This is where the Back to Work Program comes in.

Through this program, you realize that all is not lost. The FHA has now made it possible for you to buy a home one year after a foreclosure. Even if you had filed for bankruptcy, you can still be on course to acquire a new home. However, the Back to Work Program has a number of conditions:

1. You must have gone through what is described as an economic event. This includes things like bankruptcy filing, foreclosure and short sale.

2. It must be proven that you have shown signs of economic recovery.

3. You should be ready to attend counseling on home ownership.

The Back to Work program also frees you from a number of waiting periods that are set for anyone coming out of foreclosure and bankruptcy. You should also have maintained a good credit history during the last 12 months prior to applying for a mortgage. Under this program, millions of Americans can now realize their previously quashed dreams.