If you're thinking of buying a home for the first time, a Fort Lauderdale FHA mortgage might be the key to funding your purchase. The Federal Housing Administration insures an FHA loan, which permits lower qualifications for borrowers than a conventional loan.
FHA loans are especially popular among first-time homebuyers because you can pay as low as a 3.5% down payment while other kinds of mortgages require 20-30%. Here's a list of tips to consider if you wish to secure an FHA home loan in Fort Lauderdale, FL.
Tips to Obtain Loan Approval
Review your Credit Score
At Nationwide Home Loans, we advise our clients to take a couple of minutes to pull their credit report and review their score. Surprisingly, a number of future homebuyers never evaluate their credit history and score before submitting a loan application, presuming that they have a high enough score to meet eligibility.
Moreover, many don't consider the likelihood of identity theft. However, credit activity and credit scores have a significant impact on mortgage approvals and credit fraud, and a low score can stop a loan application before it even gets started. In fact, a considerable portion of lenders requires a minimum score of 680, with very few lenders going down to 620 for FHA loans. If your score is below 680, lenders could reject your request for a loan. Besides higher credit score prerequisites, numerous missed payments and chronic lateness could stop loan approval.
We encourage prospective buyers to make timely bill payments, lower their debts, and stay on top of their credit report. At NHL lending, we recommend you clean up your credit history in advance and fix errors on your report to maintain a good credit score.
Save Your Money
Requirements for obtaining a home loan frequently change and if you're thinking of applying for a mortgage in the future, be ready to pay some cash. Going to a lender's office without any savings is a fast way to face rejection on your loan application.
These days, mortgage lenders are vigilant and need a down payment. When it comes to down payments, the minimums differ depending on various factors, such as the lender and the kind of loan. Every lender sets its criteria for down payments but will require a 3.5% down payment on average.
If possible, it is beneficial to make a more substantial down payment. Nevertheless, a down payment isn't the only cost you should worry about. Obtaining a mortgage involves home inspections, closing costs, home appraisals, and application fees among other expenses.
Remain at Your Place of Employment
It's vital you stick with your employer while going through the process of purchasing a home. Any changes to your income status or employment could stop or significantly delay the mortgage process. Remember, lenders approve your loan depending on the information you provide in your application. Any changes will force the lender to reassess your finances to establish whether you're still eligible for the loan.
Reasons You Could Face Denial after Pre-approval
One of the most significant steps to buying a home successfully is obtaining pre-approval for a loan before shopping for properties. The major reason to get pre-approval for a loan before shopping is to ensure you only look at properties that are within your available price range.
Even if you obtain pre-approval for a loan, it is not a guarantee that you'll secure financing successfully. It's possible to face denial after pre-approval due to the following reasons:
One of the most common grounds for denial is an employment change. Depending on the kind of financing you're obtaining, specific requirements exist for the duration of consistent employment. For instance, FHA loans require a buyer to have a solid two-year employment history.
In the event of gaps, they need a written explanation, which the mortgage underwriter should approve. An employment change might be acceptable in some instances if the field is similar. We recommend you consult your lender about any possible change of employment before you make the switch.
Negative Credit Item
A popular misconception when buying a home is that lenders require perfect credit. This isn't true. However, every kind of mortgage has particular credit score principles. A common reason for denial is a negative entry on your credit report. It's crucial that you review your credit score when you obtain pre-approval and understand how credit scores affect mortgages.
Another common reason for mortgage denial after pre-approval is additional debt. Avoid any extra debts or credit lines after securing pre-approval. This can have a big impact on your debt to revenue ratios and ultimately result in mortgage denial.
If you're in the market as a first-time homebuyer and are considering various financing options, you should consider FHA home loans Fort Lauderdale to turn your dream into a reality.