So, you have a little money and you are ready to head to the bank to find home loan lending. "Don't I need to find a house first" and then apply for a mortgage? NO. You will be much better off if you have an idea of what kind of mortgage options you can get before you go house shopping. Some sellers want a pre-approval letter upon accepting your offer. Plus, if you know how much of a mortgage you can get, you know the price range you should be looking in.
You have two options to find a home loan lender, your local bank or a loan broker. The best place to secure a loan is your neighborhood bank. You will get the best terms and lowest closing costs there, but it will take longer and the requirements (credit score, job, finances, ect.) are more stringent.
I get all my loans from a loan broker. A loan broker is a middle man who is trying to generate loans and then he sells them to large home loan lending institutions. The loan broker is much more eager to get your loan through because he gets paid a commission. The commission is usually around 1% to 3%, but he can put it in the loan or have the seller pay up to 3% closing costs. Remember you can and should negotiate the amount of the commission with the home loan lender, loan brokers are a dime a dozen, so don’t just accept his commission at face value (shop around). A loan broker is more expensive to use than your local bank but it’s faster, easier and they can help find a home loan for people with bad credit. Keep in mind that the worse your credit the more you are going to pay, but that’s just the cost of doing business. The simple way to find home loan lending is to go thru a loan broker. I would suggest that you get with a local broker and start a relationship. Tell him what you would like to do and see if he has any suggestions. If you would like to find a home loan lender in your area click here....
In order to secure home loan lending for the purchase of a property you must first satisfy some basic requirements. First, you should have a job. One or two years in the same field is the best option. If you do not have a traditional job, are self employed, or have not been on the same job for more than a year; but you think you can still afford a house payment and have a good credit score, then you can apply for a stated income or no documentation loan.
Next you will need a decent credit rating, 500 or above.Another important asset to have is a little money in the bank. It doesn’t have to be a fortune, say around $1,000. You want to be able to prove that you can afford some of the closing costs. Having some money in the bank looks better on the loan application. Although it is very plausible to purchase a home with truly "No Money Down" and no closing costs.
If you do not have a good credit rating, you can still find home loan lending, but it may take a little longer.It is my opinion that credit counselors are a rip off, they just take advantage of people that have gotten into trouble financially. Learn to do it yourself. First, check out how to build or repair your credit score. If you work at it you can find a ( home loan for people with bad credit ).
Don’t get discouraged, it is possible to fix and/or increase your score in as little as six months to a year, so start now!
~True Story~
Our first home was a small two bed one bath V.A. repo. I had under a thousand dollars in the bank, a job, but I had a judgment on my credit report from a credit card I went bad on five years before. A judgment on your credit report is a deal killer, so I assumed there was no way I was going to be able to get a loan. I went to a loan broker and showed him my situation, and he pointed out that my wife’s credit had no judgment, and had a pretty decent score. He was able to get us a loan for the house using my wife’s credit with nothing down and the seller paid most of the closing costs. I think I brought $400 to the closing. The Point Is!, don’t assume you can’t do it. Talk to someone who knows because, maybe you can.
