Buying your first home is exciting. At the same time, it can be challenging. You might have to try extra hard to be approved for a mortgage loan if you've never bought a home before. However, there are a few things that will make it easier for you to find a lender that will approve you for a first mortgage loan.
The following are six things that will make it easier for you to take out a first-time home buyer mortgage loan.
Having a lot of money saved up for your down payment
First-time home buyers without an extensive credit history might find it easier to be approved for a mortgage loan if they have a lot of funds available for their down payment. Having a large down payment shows financial strength and minimizes the amount of money that you have to borrow on your first-time home loan.
Being able to show documentation of your income
Simply bringing in an income is not always enough to secure a mortgage loan. You also need to be able to prove that you're earning your income with documentation.
Ideally, you will be able to provide the contact information of your employer to mortgage lenders so that lenders can verify your income. However, you might be able to use your tax return to verify your income if you are self-employed.
Taking out a Federal Housing Administration (FHA) mortgage loan
If you're struggling to find a mortgage lender to approve you, you might want to shop for an FHA loan. This type of loan is insured by the FHA to minimize the risk for the mortgage lender. Because these loans are insured by the FHA, consumers with shorter credit histories, lower credit scores, and lower incomes may be eligible for them.
Having an established credit history
It will be hard to be approved for a first-time home buyer mortgage loan if you don't have any accounts on your credit history that have been open for an extended period of time.
Mortgage lenders may be wary of taking a risk on you by lending you a large sum of money in the form of a mortgage if you don't have a long history of making payments on time.
Shopping around among different mortgage loan providers
Don't get discouraged if the first mortgage lender you apply to doesn't approve you for a mortgage. Some mortgage lenders will be more likely to approve a first-time home buyer than others. You shouldn't necessarily assume that you can't take out a mortgage loan just because you've been refused by one lender.
Being mostly free from debt
You'll be more attractive to mortgage lenders if you don't currently owe a lot of money. Consumers who don't owe a lot of money are less likely to get behind on their mortgage payments and default on their home loans. Pay down some of your existing debt if you can before you apply for a mortgage loan.
For more information, contact a local company like Loan Depot.