When it comes to owning a house, it can be simple and sophisticated at the same time. It is simple when you understand how mortgage loans work, and it can get complicated when you are still preparing to take out your loan. There are times that you need to consult a property lawyer first to understand the real estate law and know what is the legal stuff you need to know.
There are also many factors to consider when taking out a mortgage loan. You have to make sure you are ready for it in every way and that you are committed to taking the challenge. It is not like any other loans that you can pay within a short period. These types of loans usually take ten to thirty years for the repayment period.
If you are interested in taking out a home loan, then there are many mortgage Loans that you can take advantage of. However, you need to make sure that you are prepared with everything you need for your mortgage application.
Prepare Your Down Payment
First and foremost, you need to have money. The amount depends on the price of the property you will purchase. It is advisable to have an approximate amount of how much you are willing to spend for your house. You also need to take into consideration your financial capacity when making a decision. From your set budget, you need to save up at least twenty percent for your down payment. Although there are many lenders these days who offer low down payment, it is best to put in as much as you can so your repayment will not be a burden to you in the future.
Your down payment is one of the most important things you must have when buying a house. Usually, the down payment requirement is twenty percent of the total cost of the property. However, several lenders are offering a lot lower down payment, especially government ones. But we urge you to save as much as you can and put down the maximum amount you can for a lighter repayment term. Lower balance means a smaller amount to be capitalized and lower monthly amortization for you.
Fix Your Credit Score
One of the primary requirements for every mortgage loan is for the borrower to have a good credit score. If you are starting, it is best to build up your credit first. Usually, the minimum credit score is 680, although there are some lenders these days who accept lower ones. But to be on the safe side, it is best to bring your credit up to that level.
Your credit score is one of the primary qualifiers for loan approval. Therefore, you need to make sure that you not only have a high credit score, but you also have a good credit history. When one is not met, it is not easy to get approval and a good deal for a mortgage loan. If you have bad credit, then it is best to try and fix it first. Ensure that all your accounts become current and you’re able to make your payments on time. If you are still trying to build your credit, make sure that you take it slowly but surely.
Additionally, you also need to make sure that your credit history is pristine. In case there are adverse credit reports, make sure to fix them first by bringing all your accounts current and make sure that your payments moving forward are paid on time. Any adverse credit history will remain on your report for the next seven years. Make sure that you didn’t fake your credit as it is not lawful to do it. Or else, you may end up having some legal troubles.
Read this: How to “Fix” a Bad Credit Score
Find an Appropriate Lender
If it is just a matter of finding a lender, it is easy to get one but you need to ensure that you also get a good one. They should also be abiding with the real estate law especially when it comes to interest rates and terms. You need to look deeper into reasonable offers to make sure it is the right one for you. Learn everything you can on the interest rate and the type of interest. There are instances where low-interest rates mean high payments due to the kind of interest. You can also check the reviews of lenders to see if they are credible. It is best to consult a property lawyer if you are not sure if the lender is appropriate for you or not.
You will need to find the best lender that suits your needs. You cannot just choose the first lender that interests you. You have to be careful about the interest rates so better know the types of interest as well. There are many instances in the past wherein, those with lower interest rates end up paying more because of the kind of offer. You also have to be careful with hidden charges. Therefore, the best thing you can do is learn everything you can on a particular offer before signing in.
Seek for Local Government Assistance Programs
If you are a first-time home buyer, then you don’t probably know about government assistance. But it is something you should look into. There are many assistance programs offered by both the federal and state government. Usually, these offers have low-interest rates with low down payment and reasonable repayment terms. So, if possible, check if you qualify in one of them. It could help you out in taking out a mortgage loan.
Owning a house for the first time is one of the most fulfilling things in life. Often, it is not easy to own one. It usually takes a lot of planning, dedication, and commitment to earn enough to buy one. And the responsibility doesn’t end there since you will be tied to it for the next ten to thirty years of your life. Therefore, if you are planning to purchase your own house, you need to be determined in doing so knowing it is a long-term commitment. Also, if it is your first time to buy a home and unsure of many things, then it is ideal to consult a property lawyer and better understand the real estate law to avoid troubles in the future especially on your loans.
Lawrence J. Friscia, III
Senior Partner & Founder
Mr. Friscia began his legal career working on complex private equity M&A transactions for the New York City law firm of Schulte Roth & Zabel. Mr. Friscia left the world of Big Law in order to devote himself to a more client-centered practice in which he could directly impact the lives of individuals struggling to survive the current economic crisis. Consequently, Mr. Friscia founded Friscia & Associates LLC (the “Firm”).
Mr. Lawrence Friscia’s practice focuses primarily on foreclosure defense, short sales, real estate closings, bankruptcy, and business law. As a native of New Jersey, Mr. Friscia takes a special interest in his foreclosure defense and modification practice, as it offers him the unique opportunity to help keep members of his community in their homes. As the Firm has grown, Mr. Friscia remains dedicated to the principle of personal attention and close client contact. With this in mind, he is personally engaged in virtually all of the Firm’s active matters, ranging from foreclosure defense cases to residential closings.