Home Loan Eligibility Requirements – What You Need to Know to Apply For a Loan
No doubt, in the beginning each bank claims it can provide up to 30 times of your gross monthly income; this gets the applicant very excited. However once loan qualification is being processed, matters change dramatically. The qualified loan limit will reduce; many other factors will require a request for modification of the loan terms. This could mean a change from a variable rate to an fixed rate, or it could mean a change in the repayment period, which in itself can mean a significant decrease in your monthly payments. So what should you do?
While changes to home loan eligibility criteria are common, there is still a chance that you won’t qualify. It is important to understand why bank’s review eligibility before applying for a home loan application. Banks use various reasons for modifying loan eligibility criteria and while it may not be in your best interest to request a home loan modification, you shouldn’t dismiss it as a possibility entirely. What you must understand is, even if you aren’t going to receive approval for a standard home loan, there are some banks that will give you a home equity line of credit (HELOC), which you can use to repay your existing mortgage. This means that your payments will be tax deductible.
In most instances, when you are not qualified for the home loan because of insufficient income or other financial considerations, the first step in appealing the bank’s decision is to provide documentation of income. Most borrowers don’t understand that they are required to provide proof of income when they are submitting their loan application. Banks are not obligated to inform applicants that they will be required to submit income statements unless the borrower requests such a statement. Banks review all income and expenses documents submitted by eligible applicants and take into consideration any other financial hardships.
There are two different ways to obtain the home loan eligibility calculator. The borrower can complete the process using the standard home loan eligibility calculator or they can access one that has special features tailored to borrowers who are self-employed. A self-employed applicant will need to provide their income information in addition to any other documents that might be required. A borrower can find and access the online calculator easily. If you’re self-employed, be prepared to provide some information on your taxes, if any, and provide copies of signed income tax forms.
If you are currently self-employed, you should know your current status and the minimum age you should be to apply. Self-employed persons over the age of eighteen should be over the age of twenty-one. The minimum age for a borrower to be considered for a loan modification is twenty-one years old, unless otherwise stated. Your lender will use your current monthly income and your regular monthly expenses, along with your maximum age, as part of their determination of your eligibility for a home loan minimum age. Be aware that even if your monthly expenses are lower than the maximum, you may not qualify for the lower loan rate if your income is still too low.
Once you know your loan eligibility qualification, you should compare the cost of a traditional home equity loan and the cost of an FHA loan to see which one will be better suited to meet your individual needs. Your credit rating will also play an important role in your loan eligibility decision. The higher your credit score, the more likely you are to qualify for a lower interest rate and lower monthly payments. If you have bad credit, however, you may not be able to qualify for a traditional home loan and will instead need to look at an FHA loan. However, an FHA home loan will not generally be as favorable to borrowers with bad credit as a traditional home loan would be. Even if you have good credit, you may want to consider an FHA loan to reduce the cost of your home.
Homeowners who are not currently homeowners, but who have the desire to purchase a new home should also look into loan eligibility requirements. Depending on your situation, a mortgage may be your best option for financing your home. You can learn more about your mortgage options by registering for a free mortgage guidebook or by contacting your local housing counselor. Housing counseling can be a great resource for borrowers who need help applying for a mortgage and should be considered prior to making any purchasing decisions.
Homeowners should always make sure that they meet all the eligibility requirements for a loan if they plan to purchase a new home. There are many different types of loans available from both the government and lenders, and you should research each type so that you know what loan to apply for based on your specific financial circumstances. Homeowners should be sure that they meet loan qualification requirements before they submit an application for a home loan.