The following is a Guest Post:
Bio: Gloria Agnello is a financial author and has been contributing her articles to quality web sites. She generally covers various topics on personal finance.
What are the 3 largest obstacles that home buyers face when taking out mortgage loans?
Are you in the market to take out a home mortgage loan? If you answered "yes," you must be very careful while taking out first time homebuyer loans; as this is one huge financial responsibility. Since you have to use your home as collateral to the loan, taking out the right loan is important- you want to avoid a possibility of a forced foreclosure. The most common question asked by homeowners when they go to take out their mortgage loans for the first time is whether there are any obstacles to taking out the right loan in the market. The answer? Well, yes, sadly: there are 3 main obstacles when it comes to taking out a mortgage loan. Have a look at some of them before going forth:
1.) Your credit score: Your credit score is of prime importance when it comes to a mortgage loan. In fact, not only a mortgage lending company, but all companies who give out loans or new lines of credit, will check your credit score. If you have a good credit score, you can be sure that your lender may give you a loan with an affordable interest rate, thankfully. On the other hand, a poor credit score may make you get a loan that is beyond your budget and you may find it difficult to bear the loan throughout the repayment term. Therefore, take heed that it is always better to repair your credit score and then apply for a mortgage loan.
2.) Your monthly income: The mortgage lender will check your monthly income as to determine whether or not you’ll be able to make the payments on time; even after managing all your other debt obligations. If you have a sufficient monthly income, it is most likely that the lender will trust you while lending you with the specific amount. You can try to boost your income resources, so that you get the loan amount that you want to.
3.) The down payment: The down payment often becomes another obstacle when a first time home buyer takes out a new mortgage loan. You must save enough money so that you can pay down at least 20% of the loan amount. If you do not pay that amount, it's likely that you’ll have to pay private mortgage insurance that will unnecessarily increase your monthly payments.
Overcoming the above obstacles by boosting your credit score, looking for secondary sources of income and saving money for the exact down payment can easily get you a first time home buyer loans at a reasonable rate. Manage your personal finances and make payments on time: that's what it comes down to.