How To Plan For New Home Loans

Getting a new home loan isn’t like walking into a 7-Eleven to buy a slurpee. Buying a new home takes persistence, work, and some smart planning. Planning to buy a home can take a few years, but you can really short-cut the process if you understand what’s going to have to happen to buy a home. I wanted to create a small resource that can help you with this process.

The first thing you need to do is gain employment. Obviously if you already have a job you’re taken care of in this area. Sometimes, however, people have some money because of an inheritence or rich parent and they try to get a home loan. This really complicates the process because most lenders want long term security.

Make sure to file your taxes. You generally will need both pay stubs and tax returns to qualify for a new home mortgage loan. This wasn’t the case a short two years ago but banks have really tightened up in today’s economic environment. There was a huge amount of fraud that went down during the last real estate bull run and it caused a lot of problems.

Save some money. The most liberal loan out there right now is the FHA loan and you will still need to save 3.5% for a down payment. The days of 100% financing are gone for now and probably won’t be back for at least a few years. If you can’t qualify for an FHA loan you will likely have to pay somewhere between 5-10% for your down payment.

Fix your credit now. The biggest thing that can be done to improve credit is paying off your credit cards completely. When you carry a high balance it can really affect your credit score. The amount of debt you carry on credit accounts can affect your score by as much as 255 points. Yikes!

New home purchase loans really aren’t much different than other mortgage loans. The bank really doesn’t care whether the home is brand new or a few years old. The most important thing to the bank is the value of the home.

There are a lot of people who are going to want to shortcut this process but that isn’t wise. You shouldn’t be buying a home if you don’t have a down payment. You shouldn’t be buying a home if you don’t have a job. You should take the time to plan so that you can stay in your home without running into trouble.