When you go to buy a home, you will need to apply for a loan with a mortgage lender, unless you have enough money saved to buy the house outright. Most people do not have that much money saved, though. Applying for a mortgage loan can be a bit nerve-wracking because there are so many things that have to take place in order for the lender to approve the loan. The guide below walks you through a few different things that need to be considered when the lender decides to approve or disapprove a loan.
Details About the People Applying for the Loan
The first thing that is taken into account is important details about the people applying for the loan. The lender will check your credit history to make sure that you repay your debts in a timely manner. They will also consider how much you make per year and what your other average bills are to determine if you will be able to afford the payment for the loan if they approve it.
Determine If the Home Passes an Inspection
Next, the home will need to be inspected. The lender will be making sure that the home is safe for you and your family to live in before they approve the loan. If you are looking to buy a home that needs a lot of work done to it to make it habitable, you need to apply for a different loan than a traditional home loan because there is more risk involved for the lender. You could have too difficult of a time trying to fix up the house and end up giving up on it and walking away from the property. This leaves the lender with a property that they will have to try to sell, which can be difficult when it is dilapidated. When you got to apply for the loan, be sure to let the lender know you are trying to buy a fixer-upper so that they can help you apply for the right loan.
Determine the Value of the Home
Before you can be approved for a loan for a home, it has to be appraised. The lender will not approve a loan for the home that is higher than the value the home is appraised at. You can still buy a home that is appraised lower than you feel the home is worth if you are able to put down money toward the purchase and finance what is left.
Buying a home takes time. There are a lot of different steps that need to be taken in the home buying process, but in the end, you can purchase the home of your dreams, which will make everything worth it.Share