Getting your own home in cities like Birmingham Alabama is probably one of the best feelings that anyone can ever have. It’s probably one of the biggest purchases as well. But getting your own home can be a tad bit complicated. You have to financially be prepared for possible huge expenses. From down payments to closing costs, applying for a mortgage can be financially draining. There’s a way on how you can get approved in just three easy steps.
Prep up Your Credit Score
One of the first things that your lender will check would be your credit score. You have to make sure that it’s in good standing so you won’t have any issues with getting your loan approved. You might want to check your credit score and see if there are any disputes. Have them reported if needed to remove the errors?
Pay your credit cards on time so that it’ll show that you’re not using all of your credits. Using all of your credits or even over drafting may be a red flag to most lenders, especially in states like Alabama. Use only 30 percent of your total credit limit, or even less I possible.
Also, avoid opening another credit card or make any expensive purchases three months before you apply for a mortgage. Lenders might feel that you don’t know how to budget your finances and might even affect your mortgage application.
Choose the Best Mortgage that would Work for You
There are two major types of mortgage the borrowers can choose from. These are the typical fixed- rate mortgage and the adjustable- rate mortgage or ARM.
A fixed- rate mortgage is a type of loan where mortgage rates do not change until the end of the term. It’s ideal for borrowers who doesn’t feel comfortable with fluctuating mortgage rates. An adjustable- rate mortgage offer lower rates if compared to a fixed- rate mortgage. However, the mortgage rate might change depending on the housing market. Some borrowers located in states like Alabama prefer getting the ARM because of its affordable mortgage rates in the first few months. People who usually chooses ARM plans to have their houses paid off as soon as they can to prevent any more mortgage rate increase.
Consider Getting a Government- Funded Loan
Loans that are insured by FHA or Federal Housing Administration can be ideal for homebuyers who can’t afford to pay the 20 percent down payment. Home buyers who are eligible to get this loan can even pay as low as 3 percent on their down payment.
However, putting a down payment as low as that would mean higher monthly mortgage payments in the future. If you think that your financial status will improve in the next couple of months, getting FHA approved loan is the best option for you.<< Back to the list.
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Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.