Making the decision to buy your first home is undoubtedly a monumental, life-changing occasion. For many, owning a home is a lifelong dream that takes years of planning and saving. There is a lot that goes into finding the right home for you and your family – from deciding which neighborhood will best fit your needs to figuring out how many bedrooms and bathrooms you want. Beyond all the small and big details alike, there is one thing anyone buying a home needs to figure out – how to finance it. Unless you’re independently wealthy, chances are you will need to get approved for a home loan. These days, that isn’t always as easy as one would think. In fact, there are numerous different factors that contribute to whether or not someone is given the green light for a home loan.
Before we dive into some of our favorite financing tips, we would like to point out that getting a mortgage loan is something that you should plan for in advance. Unfortunately, this process isn’t always an easy one and often takes much, much longer than anticipated. Considering how hot the housing market is in North Texas, we encourage you to think ahead and do what you can to get approved for financing before ever setting foot in an open house. We say this in large part because we want to prevent disappointment. We can’t tell you how many times we have seen a couple turn up defeated because they found the home of their dreams, only to realize they didn’t have their finances in a row. With that in mind, let’s go over some helpful tips to guide you when it comes to the home financing process:
- Find Out Your Credit Score
Knowing your credit score will actually help you a great deal. These days most of the major credit card companies provide you with your credit score on a regular basis, making it easy to know where you stand. Furthermore, you can pull your entire credit report twice a year for no charge and make sure there aren’t any discrepancies or negative accounts. Your credit score and overall credit report will actually have a major impact on whether you get approved for a mortgage, so it pays to understand this information before ever stepping foot in a bank or lender’s office.
- Bulk Up Your Savings
One of the fastest ways to get rejected for a mortgage loan is to walk into the bank with zero savings. While you will be financing the big portion of the home price, having some cash to put down is a must. Back in the day zero-down mortgage loans were fairly common, but with the housing crisis and collapse of the economy, this is no longer the cause. Mortgage lenders are quite cautious these days and are far more likely to approve those with some cash in the bank for a loan.
- Pay Down Debt
While a zero balance on your credit cards isn’t necessarily a requirement, it will help to show that you are paying down your debt. The less you owe to creditors, the better. One of the top things lenders look at when deciding whether to approve a loan is a person’s debt-to-income ratio. If you have a lot of debt but aren’t making enough to pay down your credit cards or student loans, lenders may be wary of whether you can handle a mortgage payment, too.
Thinking about buying a home in the Frisco area? Give The Cheney Group a call. We offer various financing solutions and are here to answer any questions you may have about buying a home, getting approved for a mortgage, and so much more.