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First Home Buyers: How to Qualify for a Loan

Buying a house is an important task which includes a lengthy process and overstressed financial aspects. Many people don’t have the full amount to pay for their new home and therefore, have to look for a mortgage or home loan. Home loan application seems like a difficult task that requires a lot of logical thinking and analysis. The home loan market offers so many deals and rates that it may take a little time to decide on the best one. Proper consultation and research can make the loan taking process easy, but first you have to qualify for a home loan. 

Here are a few tips for first home buyer’s loan qualification success

 

  • You must have a regular savings history. Everyone faces living and other expenses, but financial firms always like to see a person’s ability to save.
  • You should always keep a written budget on your side as financial firms are usually interested in knowing how you spend your money. The easy way to get a written budget is to get a print out of your three months bank statements and make a report of your transactions. Annual expenses such as insurances and income tax should also be included in this report.
  • The bank will also check all the previous credit history in your account statement in order to see whether you will make regular monthly payments or not. It will not break the home loan deal but will let the bank know if you have ever defaulted on a previous loan, forgotten to pay a bill or had a declined credit application. You must check your previous credit history if you want to qualify for a home loan.
  • Financial institutions do like to see stability in employment. This ensures that you will be able to make mortgage repayments in time. The bank definitely want to know whether you have a frequent change in employment. If yes, then get ready to explain a valid reason for changing the job.
  • Reduce your other debts. Any personal debt you have will impact the amount that a bank will lend you for your home. Car loans, personal loans, credit card debts – reduce your personal debts as much as possible before taking on a mortgage. Also consider reducing the credit limit on these loans as you repay them.
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