Home Finance: How to deal with it?

Posted: November 29, 2010 in Uncategorized

They say that having a house is the best investment that one could ever achieve. Before having it, we should be aware in financing a home. Like applying for a loan or mortgage, there are lots of things to take into consideration. The more we know about home financing, the wiser we will be in making a decision. So these are steps that one may know if he can afford to finance a home:

1. Evaluate your finances and gather financial documents you need to get a loan or mortgage

Determine how much loan or mortgage you can afford. Make sure that your income and expenses and current projects each month can manage it. Gather documents like pay stubs, statements from banks, income tax returns and records of debts such as credit card debts, mortgages and other cost.

2. Start to shop a loan

If you are prepared to shop for a loan then find a lender or broker to looked at your documents and approximate how much you can manage to borrow.

Lenders have the money to lend but limited number of loans. They are the ones who decided the final decision of your request. While brokers, they have many lenders to choose to avail loans for you. They are mediators and can be able to search out the loan that you need.

Take note that there are factors that can have an effect on the true cost of the loan. Like application fees, broker fees, prepayment penalties, appraisal and many others. So don’t immediately set off with the lowest interest rate.

3. Submit an application for a loan.

In applying for a loan, the procedure are easy provided that you’ve collect the necessary documents to show claims you make on the application. The application will inquire about your assets (bank accounts and investments, property, cars) and your liabilities (installment loans, auto loans, credit card debt, mortgages, household expenses and others) your job tenure, employment stability, and income.

The lender will check your credit reports at FICO scores and if it consider you creditworthy, then he will appoint a professional appraiser to make sure that the house you want to buy is worth it.

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