Homeownership is a keystone of wealth. Homeowners enjoy financial affluence and emotional security. However, the road to homeownership is challenging and often filled with hardships. Sourcing for finances and accumulating enough savings to buy in cash can be a tough road ahead.
Home loans, Scottsdale, provides you an easy alternative to owning a home. For first time buyers, the process of applying for home loans is often confusing and requires some form of guidance to achieve the objectives.
Are you planning to borrow home loans? We can help you apply for home loans in Scottsdale, Arizona. This post explains how to improve your chances of home mortgage approval.
1. Check your Credit Report
When applying for Scottsdale home loans through a bank or a mortgage company, the first thing they look at is your credit score. Having a good credit score is imperative to qualify for mortgage preapproval. Moreover, lenders decide the mortgage interest rate depending on the borrower’s credit score. Borrowers with a low credit score will be forced to pay a high-interest rate while borrowers with high credit scores can bargain a lower interest rate.
Here are essential factors to bear in mind regarding credit score:
- Check your credit score
- Pay bills on time
- Avoid taking unnecessary credit.
- Avoid falling behind on debts.
The tips I have highlighted will help you maintain a high credit score at all times.
2. Set a Home Buying Budget
Before you begin the mortgage application process, determine how much house you can afford. The mortgage lenders expect that you will repay the loan without falling behind. To determine how much home you can afford, start by adding up every income source that checks into your account monthly. The next step is to compute the total monthly expenses. The difference between income and costs depicts what you can afford to buy a home. Remember to factor other financial obligations, which include insurance and savings.
When budgeting for a new home, remember the 25% rule. The rule dictates that your mortgage should not be more than 25% of your gross income monthly. If you have other debts, consider them in addition to the mortgage repayments, to determine how much you can afford. The down payment should not depict how much house you can afford. Remember to set aside closing costs, which can defer depending on the mortgage lender and the home mortgage type.
3. Take Time to Understand the Mortgage Options
By learning the different Scottsdale home loans, you can choose one that suits your home-buying plans. Here is an overview of the different types of mortgage to consider.
● Conventional Home Loans
The conventional home loan simply refers to the loan amount falling within the maximum limits, defined by Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac are the government-sponsored entities that back most of the home mortgages in the US. Generally, conventional home loans chandler require a down payment of 20%. Further, the mortgage borrower may be required to pay the private mortgage insurance monthly. The traditional home loan can be used for buying a primary home or even an investment property.
● Jumbo Mortgages
This is a conventional mortgage type with none conforming loan limits. The jumbo mortgage allows borrowers to borrow more money to buy a home in an expansive area. For jumbo loans, the interest rates tend to be competitive with other conventional loans.
4. Government Insured home mortgages
Another option you may encounter when searching Scottsdale home loans is the government-insured mortgages. The options include
- Federal Housing Administration home loans
- United States Department of Agriculture home loan
- Veterans Affairs home loan
The government-backed home loans feature friendlier loan terms, and they are open to the first time and return borrowers. When evaluating the different home loan types, ensure you look at the terms and conditions to qualify for the loan. Moreover, look at the interest rates to choose a mortgage type you will not strain to repay.
5. Hire the best Mortgage Broker
When considering Scottsdale home loans to purchase a property, it is recommended that you work with a mortgage broker. The mortgage brokers understand the lending landscape and can connect you to the best mortgage lenders.
Moreover, they know the different home mortgage types, guiding you through the application process. Mortgage brokers could snag you lower interest rates on Scottsdale housing loans. By helping homebuyers through the mortgage application process, the mortgage brokers help you save precious time.
Are you planning to apply for home loans in Scottsdale? Talk to the experienced mortgage brokers. We can help you apply for Scottsdale home loans. Contact us today!