Mind of Money

June 21, 2018 at 1:00 am

3 Things You Should Know and Do Before Applying for Housing Loans

home with coinsSo, you’re thinking of the next big purchase. Finally, you have saved some money and you are now looking to buy a new house for your family. At this point, you should be searching for different loan options.

To help you get started, here are some important tasks you should work on:

Evaluate Your Financial Capacity

Start doing the math. List down all your expenses and compare them with your monthly income. Don’t include the money you saved for the down payment. Another way to do this is to get evaluated by a potential lender. Usually, they will ask about your source of income, your assets, and your credit history.\

Pay Your Outstanding Debts

Before applying for a housing loan, it’s best to clear your debts. It’s a standard protocol for any lending companies to check your credit score. Any delinquencies or delayed payments can get you a red flag. The approval process would be easier if you don’t have any outstanding balance.

Maximize Your Loan Options

There are different loan options you can explore. Choose the best one that suits your needs and financial capabilities. To get an idea, check out the list below:

  1. Fixed-Rate Loan – This is one of the most common housing loans available, which requires a single interest rate. This is good for buyers who are looking for a permanent home or intend to live there for a long time.
  2. FHA Loan – Usually, lending companies require a 20% down payment. With this option, you can cut it down to as low as 3.5%. Primary Residential Mortgage, Inc. also recommends checking out the HARP home loan.
  3. USDA Loan – This development loan is ideal for families in the rural areas. If you qualify, the government will finance 100% of the actual costs. This means you don’t need to pay for the down payment and you’ll enjoy low interest rates.

These are just some of the important tasks involved in applying for a home loan. Consult a property manager, lender, or financing agent for more information.