We reported on the dropping mortgage rates yesterday, but the low rates do not always mean that you can get a home loan these days. Credit has gotten tighter as banks have increased restrictions on individuals and companies. There are four basic obstacles to getting a home loan even for some qualified buyers.
If you have any credit problems at all, now is the time to get them fixed before applying for a home loan. These days, you have to have near perfect credit in order to qualify for a home loan. Late payments on credit cards, utility bills and other debts can drop your credit score and make you a less attractive risk for a mortgage loan.
One of the biggest obstacles to getting a mortgage loan these days is the down payment aspect. New home buyers have trouble coming up with a sizable down payment for a home. With most traditional mortgages, you need at least a 10 percent down payment before you will get approved for a house loan. With the tighter restrictions, you may need 20 percent or more in order to qualify for a home loan. If you have bad credit or damaged credit, you may need even more than that.
One aspect of a mortgage is based on the potential borrower's income. Borrowers who have a low income may not be approved for a loan big enough to have a mortgage if their income is not high enough to make the monthly payments. Another income issue is the stability of the income. If you are trying to borrow money for a mortgage but you have just started a new job or if your job is unstable, you may have a problem qualifying for the mortgage. This often happens in cases in which a potential borrower is self-employed and they do not have the paperwork or proof to prove their income over previous years. In these cases, you may need a larger down payment in order to bring the monthly payments down or you may need to provide the proof of your income and its stability so the lender knows you have the ability to make the payments.
When you are trying to get a mortgage, part of the approval process relies on the home's appraisal. If the lender feels the appraisal is too high, you may have a problem getting the loan. However, you can always shop around and consider other lenders. Some lenders are willing to take the risk while others are not.
With all of these obstacles to getting a home mortgage, there are solutions. The solutions may take some work and dedication, but they are not impossible to accomplish. With the credit aspect, paying your bills on time for the next six months to a year will bring your credit up. With the down payment aspect, you may be able to borrow some money from family members or apply for federal monies set aside for first-time homebuyers. The income problem may be a little harder to overcome, but it can be done. Just keep trying and you can take advantage of these dropping mortgage rates while they are still effective.