3 Things You’ll Need to Get a Home Loan
Getting a new home loan can seem like an intimidating process. Yes, the process does require a lot of paperwork, but it makes sense considering this is one of the largest financial investments most families make.
There are many misconceptions out there when it comes to qualifying for a home loan. Whether it’s down payment or credit, let’s get together today so I can walk you through the process. You may be surprised to find out that you already qualify today!
Step 1: Down Payment
Often times you hear that you need 20% down to purchase a home. There are many down payment options available depending on the loan type you will be using to finance the home.
Quick Tip: Ask your lender about PMI or Private Mortage Insurance and how that relates to the down payment.
Step 2: Verifiable Income
Your mortgage lending will require that you verify your income via:
- W-2 Forms
- Tax Returns (Previous Year)
- Paystubs (Last 6 Months)
Quick Tip: Did you know even if you recently changed jobs you may still qualify for a mortgage? This is especially true in the change is within the same field. It’s very important always be upfront with your lender regarding the circumstance around your employment change.
Step 3: Proven Credit History
Many people are intimidated when it comes to their credit score (aka FICO score), and often don’t even know what their credit score is before speaking to a mortgage lender. Don’t just assume that you would not qualify for a home loan, there are many programs out there to help first-time home buyers. The key is to understand your credit score and the items that appear on your credit report.
Quick Tip: According to FHA.com a FICO score of 580 will qualify applicants for the low down payment advantage, which is currently at around 3.5 percent down. That means to buy a home priced at $120,000 a buyer would only need $4,200 down payment.