Thinking about taking advantage of record low interest rates and rock bottom prices of homes for sale in metro Atlanta? One of the first and biggest questions asked by buyers is: Will I qualify for a home loan? Because of the stringent guidelines set forth by many of today’s lenders, this is not only a common question, but a realistic question, as well.
Will you qualify for a home loan? Although the answer to this question will ultimately depend on the lender and their minimum qualifications, there are a number of things you can look at to better determine whether or not you will qualify for a traditional mortgage in today’s home loan market:
• Down payment – Do you have money saved up for a down payment, or will the sale of your current home be enough for a down payment for your new home? Although the total down payment amount required by a lender will vary according to the home loan program for which you qualify, generally speaking, you can expect to be required to put down about 20 percent of the cost of the home as a down payment. For example, if you plan to purchase a home that costs $400,000, you should be prepared to put at least $80,000 down, either from your cash reserves, from the sale of your current home or both.
• Credit score – Here’s a biggie. Your credit score, in the eyes of a lender, is more important than ever. Consider that your credit score is determined using a number of factors, including your payment history, the type of credit you currently possess, and your debt-to-income ratio. If you feel uncertain about any of these factors, it is probably best to order a copy of your credit report and review it before applying for a home loan. Again, lenders will vary according to their minimum qualifications when it comes to credit scores, but you should aim for achieving a score above 700.
• Income – You must have the income to support the home loan and the home loan amount for which you are applying. It is best to talk to a lender regarding this topic and to get preapproved for a home loan so you know how much home you can afford.
Need help or have questions? Give us a call at 404-842-1555 to speak to a professional Realtor who can help you find your next home.