While it is exciting to visit new properties for sale in Arizona and imagine getting over as the new homeowner, the process of purchasing a house can be tedious and overwhelming. From visiting the mortgage lenders in AZ trying to get over the financial hurdles, to hiring a suitable realtor, you have to learn from the best to make it through the process.
The elephant in the whole process of home buying rests in securing a home loan. Are you preparing to apply for Mesa home loans for your new home?
Do not fret yet, as in this post, we feature the ultimate guide to apply for home loans in Mesa, Arizona. We are going to walk you through the entire process from the start to the finish, sharing important tips for each step. This should help you be approved for a home loan by the mortgage companies in AZ.
- Start preparing by saving for a down payment
The immediate item to think about after the idea of buying a home hits you, is to prepare the down payment. However, assuming you are new in the mortgage industry and home buying, what exactly is a down payment?
A down payment is the upfront payment that a person buying a house must provide in order to be approved for the Mesa home loans by the mortgage lender AZ. Ideally, the mortgage companies in AZ will require that you cater for the down payment. The only home loan that does not require this is the reverse mortgage Arizona.
Depending on the loan type and the mortgage lender AZ, the required down payment can vary. However, the range is from 2.5% to 20% of the total purchase price of the home you intend to purchase.
Start saving for the down payment early enough so that by the time you are starting the mortgage application process you have a lump sum for the down payment.
- What is your credit score?
A good credit score is a prerequisite when applying for a number of Mesa home loans. No mortgage lender AZ will consider you if you have a negative credit history, unless you are applying for Government-insured loan products. Therefore, it is a good idea that you start working on building the credit history months before starting the mortgage application process. You can check the credit score at the credit bureaus free, to see what it appears like to the lenders. In case it is a negative, work on repairing the status.
- Work on your Debt-income ratio
Are you using credit cards? What is your current credit card debt? The mortgage lender to determine the loan amount that you can afford paying for, use the debt to income ratio. If you have a high debt to income ratio, this will affect your loan qualification. Most mortgage lenders AZ will not have a maximum debt to income ration per se. However, they have guidelines offering some flexibility, and want to see monthly housing debt of not higher than 33% of the income.
Pay off some debts to ensure your debt to income ratio favors you when applying for a loan. Also, avoid taking new credit, as it is going to affect the chances of qualifying for a loan in future.
- Do not leave your employment yet
Another factor that mortgage companies in AZ will; look at is your employment status. Do not leave the current employment, unless you have found greener pastures, where you will earn more. An applicant employed on a permanent and pensionable basis is likely to get a loan compared to a person who just resigned to start a business.
- Get pre-approved for a mortgage
The mortgage preapproval should be done prior to starting a search for a house. Ideally, you will have an idea of a property that you can afford, before you start being emotionally attached to a property. The pre-approval process is simple, and requires that the applicant present the basic financial documents and the personal information. The mortgage lenders AZ will look at your credit score, the debt to income ratio and employment status to determine the amount you can afford. The lender will print out a pre-approval report. However, this is not guarantee that you get the home buying loan. Therefore, ensure your credit score, job status and debt to income ration stay tight.
- Borrow only what you can afford to pay
From personal experience, lenders will do a pre-approval showing more than you really need. Do not apply for the amount that you do not need, this is going to affect your financial status while repaying the loan. Therefore, try to stay away from the temptation of overspending in the home buying process.
Now you know what you ought to do in order to qualify for a home loan in Mesa. Ensure that you are working with an experienced mortgage lender in AZ.
