Credit is a huge factor in getting your home loan. It is important to know your score by getting pre qualified for your mortgage before you start looking for a home. This gives you time to fix any problems on your report. If your score is low, a few months can make all of the difference. Paying down credit card balances under 50% or your card limit will help boost your scores. This accounts for about thirty percent of you credit score. Also, pay everything on time. A recient 30 day late payment can really hurt your scores. Be sure not to open any new credit with large payments, like buying a car. This will negatively affect your loan application and your debt to income ratios.
A strong employment history shows stability and proves you have the means to repay the loan. Most lenders want to see at least a two year history of your employment. Being in the same field of work for the last two years is the best. Once you have applied for the loan, do not change jobs before closing. If you lose your job or take a new job, your loan will likely be denied. At closing, odds are you will be asked for proof of employment, like a recent pay stub or possibly a call to your employer.
3. Down Payment
The larger your down payment, the less of a risk you are to the lender. It provides instant equity in the home which is security to the lender. It also proves financial responsibility. You no longer need 20 percent down in order to qualify for a mortgage. However, if you don’t put down twenty percent, you will be required to pay for mortgage insurance. Many lenders require only 3.5 or 5 percent as a down payment. And they will allow your family or close friends to help with a down payment in the form of a gift if you don’t have your own funds.