Posted by Every man dreams of having a house he can call his own. And while others have no issues whatsoever in purchasing one, most will have to take out a home loan to finance their dream property. However, there are certain things that you have to prepare for before you take out a loan for your house.
Loan Options
Know that you have plenty of options when taking out a home loan. There are conventional home loan providers as well as state and federal home assistance programs like the Federal Housing Administration and the Veterans Affairs. Theres also the USDA Home Loan Program for those who are in the low to moderately low-income brackets living in suburban and rural areas. The point is, you need to explore your options and study them well before making any commitments to take out a home loan.
Credit Score
While it is true that some lenders will not put so much emphasis on your credit score, they will still look at it as a factor. For example, while the USDA Home Loan Program will also accept individuals without a credit score, the process of loan application will be more stringent than for someone who has a credit history. And if in case your credit score is at least 640, then you will be assured of a much faster home loan approval. As such, it is often wise to take good care of your credit score while you still can.
Down Payments
Very few lenders will provide home financing without you shelling out a certain amount of cash as down payment. Most lenders will only shoulder about 90 percent of the total sale price of the home. Others can shoulder up to 97%. This means you will still have to prepare for the remainder of the amount. If a property is valued at $200,000 and you get a loan-to-value rate of 97%, then you can expect to shoulder at least $6,000. There are lenders that can offer zero-down, of course. One such lender is the USDA.
Repayment Tenure
You need to understand that taking out a home loan means you will have to repay the amount that you took to purchase your home. On top of that, there will also be additional fees. Depending on the term that you will take, this can last as short as 3 years to as long as 30 years.
These are just some of the really important things to think about when taking a home loan. Purchasing a house is a huge investment that requires careful thought.