1. Employment History. Every lender will want to make sure that the borrower is currently in employment and has a history of steady employment. Normally a first-time borrower should be able to demonstrate an employment history of at least one year in permanent full-time employment. In some cases the bank will require a longer period of employment depending on the industry and the amount of money applied for.
2. Income Level. It goes without saying that the amount of income borrower is able to demonstrate by way of payslips and PAYG summaries will ultimately determine his or her borrowing capacity. All income is offset by any existing debts such as personal loans or credit cards. In making this current elation the bank will take into account the limit of the credit card rather than the outstanding balance.
3. Credit History. Any lender will want to ensure that the applicant does not have any adverse items on their credit report. So, a borrower who has a history of , court judgments or bankruptcies will have a difficult time convincing the lender to approve the loan. Each application is dealt with on a case-by-case basis however, and if the amounts of money are minimal and a suitable explanation is available the loan may still be approved.
4. Savings History. A first time applicant for home loans will probably have to show their ability to save money. In most circumstances the bank will require you to provide 3 to 6 months worth of transaction account statements showing regular savings, and an accumulation of at least 5% of the purchase price of the property being considered. This shows the bank that the potential borrower is able to exercise discipline in their financial affairs.
5. Common Sense. In some cases a bank will consider an application on its individual merits. This means that even though borrower satisfies every criteria listed above it may still decline the application if they judge the application to lack commercial appeal. In other words they simply don’t like the look of it! This may happen if the bank has some doubts about the accuracy of the documents provided to support the loan or there may be other elements such as the location of the property that they simply do not like.

Although this outline is not an exhaustive one and bank lending policies change all the time, if you satisfy the elements on this list is more than likely that your home loan application will be approved.

Another point to bear in mind is that even though one bank may reject the application another bank may approve it. When a bank declines a home loan application it is not a reflection on the individual, rather it is only a reflection on the bank’s lending policy.

Home loan rates, comparisons, mortgages, and more. Save money on your home loan today, visit Home Loans.

For many first time home owners, it can be a little imposing walking into a loan agency and asking for a mortgage. Just bear in mind that these lenders and agencies would not be in business in the first place if they did not want your business. Right now, lenders are competing with one another to offer lower prices and better service to their borrowers, agencies are trying to find the best deal possible in order to secure more customers, and real estate is becoming something of a buyer’s market.

In other words, the ball is in your court, so to speak, so don’t assume that you’re backed into a corner, or that you will have to accept the first deal that’s offered to you. Try to get the best mortgage deal you can find.

In fact, it may be a good idea to address a few of the common worries here:

1. Bad credit

Bad credit may limit your options when it comes to taking out a home loan, but you do still have choices. Expect to pay slightly higher closing costs than you would on a standard mortgage, but know that you can still come to an agreement that will let you make reasonable payments.

2. Lower income

As long as you can reasonably cover the mortgage payments on a regular basis, you do not, in fact, need to be wealthy, moderately wealthy, or even upper-middle class to take out a solid home loan. In other words, if you have a decent job, you can get a decent loan.

3. Bad financial history

While anyone with bad financial history, such as delinquent loans and so on, will be considered “high-risk”, and, as with a bad credit loan, can expect to pay more in terms of interest and closing fees, it’s still not impossible to get a decent loan. Again, it comes down to income more than anything: If you have a decent job, you can get a decent loan.

The actual home loan application process is fairly simple, but will require a little bit of research, paperwork-gathering, and preparation on your part.

First, check your credit rating. You can get a good loan without great credit, but the better your credit, the more options you have open to you. Contest any inaccuracies in the credit report, and work to fix any unpaid debts and so forth.

Second, gather up as much proof of income as you can. Every dollar counts. Get together your bank statements, wage or salary statements, everything you can to prove that you have reliable income to cover the mortgage payments. This is the primary item lenders are looking for, more so than good credit or a spotless financial history: Proof of reliable income.

You should definitely consider going through an agency rather than simply calling up lenders directly. A lending agency is out to find the best deal for the borrowers. Furthermore, a lending agency will simplify the application process for you by presenting you only with the best options within your means. This means less paperwork and stress on your end.

In short, the application process itself is, in fact, not all that difficult to understand. As long as you’ve done your homework, you’ve checked your credit score, and gathered all the requisite documents, it shouldn’t be difficult at all to come to some loan terms that you can be happy with.

Home loan rates, comparisons, mortgages, and more. Save money on your home loan today, visit Home Loans.

Home ownership is a dream for most people, there is no doubt about that. Today, that dream is more accessible to more people than it has typically been in the past. However, not everybody is ready to own a home.

There are a lot of things to consider before taking that first step towards home ownership. Buying a home can be a great experience, but it is always a large responsibility, so you really need to stop and consider whether or not it’s a responsibility that you’re willing to take on right now.

In an effort to help you reach that decision carefully, we’ll provide you with a simple checklist for the potential new home owner. Consider these to be some basic questions to ask yourself:

1. Am I ready and able to settle down?

“Settling down” might not mean “permanently”. It’s certainly possible to buy a home, sell it, and move within a few years time. However, you need to consider whether or not your lifestyle really accommodates home ownership. Do you spend most of the year travelling for work? If so, buying a home might not be top priority. Rather, it may be wiser to start saving and investing so that you can afford a home when you’re ready.

2. Do I want the added responsibility of paying off a mortgage?

To be perfectly frank, it is possible to arrange a mortgage deal that will have you paying less per month than many people pay simply to rent an apartment. However, the consequences for failing to make mortgage payments on a timely, regular basis can be more severe than the consequences for being late making rent on an apartment. Simply put, a home owner’s credit is on the line.

3. Can I afford a home?

The recession and the housing crisis have been difficult on everyone. If you are one of the many struggling to make ends meet, then we refer to point two: Taking out a mortgage will only compound your problems, not solve them.

We don’t mean to scare anyone away from pursuing the dream of buying their first home, we simply want to make clear the weight of the responsibilities home ownership carries.

All of this considered, if you are in fact ready to become a home owner, then by all means, do a little research and find a home loan deal that will work for you. Just bear in mind that the key word there is ‘research’. Once you’ve decided to become a home owner, you still have a number of decisions lying ahead of you, so make sure to educate yourself and make the choices that will help you achieve your goals.

Home loan rates, comparisons, mortgages, and more. Save money on your home loan today, visit Home Loans.

We will break it down into a number of simple steps, starting with the preliminaries…

1) Shop for a Home that is within your Means

This applies only if you have not yet bought your home, of course.

The most important thing is to be realistic and to not try to live beyond your means. The mortgage and banking crises we’ve been experiencing these last 12 months largely come down to foreclosures as a result of people being approved for loans that they were not able to pay back. Simply put, buy a home that you can afford, and make sure you’re ready to be a homeowner before making the commitment.

2) Make a Budget and stick to it

This step applies if you are living on a fixed income: Calculate your income and expenses. Set a budget for everything from food to clothing to the gas you put in your car, and do not go a dollar over so far as you can help it. If this means switching to generic brands, so be it. Every dollar counts. Write out shopping lists and estimate the total costs, rounding up as you go. The same goes with all other expenses. Know what you’re spending, cut what isn’t necessary, and keep as much money in your pocket as you can.

3) Make a Checklist

You’ll need to write down some facts before you begin arranging your payment plan.

a. How much do you make on average every month?
b. What is the total cost of your home?
c. How long do you expect to live in this home?
d. What are your average monthly expenses? (check the budget you made in step two)

4) Study and Negotiate your Mortgage

Know your mortgage inside and out, top to bottom, and don’t be afraid to negotiate and renegotiate until you’re happy with it. Don’t submit to a mortgage plan that places unrealistic expectations on you.

One might think “the lower the payments, the better the deal”, but that’s not necessarily the case. If you are on a limited income, that may well be for the best, but remember, the lower the payments, the higher the premium. If you’re buying a home as an investment in the hopes of reselling it once the value has risen substantially, you will want to shoot for lower premiums, even at the expense of paying more per-month.

5) Determine how much you can pay each Month, and how much you want to pay

Take out your checklist. Subtract your average monthly living expenses from your average monthly income. Now, that’s what you can pay, but paying every last dollar you have is not what you might call a smart payment plan. This brings us to how much you want to pay each month.

Look at the checklist again: How long do you expect to live in the home, and what is the total cost?

This is fairly simple, actually. If you hope to move out before you’ve paid for the home in full, and you’re not buying the home as an investment but rather you simply need a comfortable place to live, then the lower the payments, the better.

However, if you hope to turn this home into an investment or buy the home outright as a permanent residence, then the question becomes slightly more complex. In this case, you want a low premium, so it will be wiser to take a larger monthly payment, so long as you can comfortably cover the costs, in exchange for a higher overall profit for yourself.

Stay Informed

There is more ground to cover on this subject, but the above should serve as an introductory guide to the basic facts of arranging a smart home payment plan. Every home buyer has different expenses and different resources, and what may be a smart plan for one may not work in any way, shape or form for another.

In summary: know your budget, know your expenses, know your mortgage, and most importantly, know your choices and make the best one available to you.

Home loan rates, comparisons, mortgages, and more. Save money on your home loan today, visit Home Loans.

That’s how banks make their money. When you think about it, all a bank does is take money from one person and loan it to another. The people who loan their money to the bank (this is what investment accounts are all about) earn a small amount of interest on the deal. The people who borrow from the bank pay a large enough interest to cover the investment account holder’s interest, and to keep the bank running and to make sure it makes a profit out of the transaction.

Whether you go with a bank or a private company, you want to keep your interest rate low, and this really comes down to one thing above all else: keeping a great credit score.

There’s a simple trick to doing this.

The first step is to simply settle all of your old debts. Some banks will loan to you no matter how bad your credit, but you don’t want that, because that comes with high interest rates. Pay off your old debts before you even think of buying a house.

Second, if you’re a shopaholic, cut up all but one of your credit cards. Sorry, but it must be done. People have a tendency to treat credit cards like free money, there’s a psychological impulse to think that, if you don’t see any cash changing hands, then you’re not really spending money.

Now, take the one or two credit cards you have left and start using them for small, simple purchases. Use them for groceries, for gas and maintenance for your car, or even for one big purchase once or twice a year like a TV or a piece of furniture. Pay the bills off when they come. Do not put them off. Do not spend anymore until your current bills are paid. Do this for a year, and you should have perfect credit.

There are some other things to practice. You want to shop around, you want to get a nice, low price on your home, and if you have a history of being handy with home repairs, that might help, too, as you’ll be a safe investment when it comes to maintaining the value of your home.

However, the number one factor for getting a low interest rate for your new home will always be your credit score.

Home loan rates, comparisons, mortgages, and more. Save money on your home loan today, visit Home Loans.

Mortgages

There are a dozen different types of mortgages, but in the interest of simplicity, we’ll just explain the basic idea behind a mortgage which is that you take out a loan using the home you intend to buy as collateral against the loan. If you fail to make payments, the lender will ultimately have the right to your home and can foreclose or sell it. Mortgages do come with interest rates, like any other loan.

Subprime Lending

Subprime lending refers to a lender providing credit to borrowers who don’t yet meet prime underwriting guidelines. Subprime borrows have a higher perceived risk. This lending is applied to people with a history of delinquency or defaulting, those with bad credit, or those simply with limited debt experience (eg students).

Subprime lending was a common type of lending during the 2007 credit crunch. Now… according to the Wall Street Journal, 61 percent of all subprime borrowers actually do have the ability to take out a prime conventional loan. So it is wise to know your options before putting yourself at risk.

Home Equity Loan

A home equity loan is simply a loan wherein a borrower puts the equity of their house up as collateral. This is common as a means of paying for much needed home repairs, paying for hospital bills, or even financing the purchase of a new car. Equity loans are given in one lump payment generally with a fixed, as opposed to adjustable, interest rate.

It’s not advised that you take this route unless you absolutely need to, and can be absolutely certain that you can pay it off. That said, this can be an excellent way of turning your home into an investment for starting a new business or paying unforeseen expenses.

Home Equity Line of Credit

A Home Equity Line of Credit, or HELOC, is a different form of Home Equity Loan. Whereas a Home Equity Loan uses the home as collateral for a lump sum, the HELOC uses the home as collateral for a line of credit. The line of credit is offered for a “draw period”, which could be anywhere from five to twenty five years, and repayment will be of the amount drawn, plus interest, which may be adjustable. This type of loan has become popular in the US because it can be deducted from one’s taxes.

Refinancing

Refinancing is basically the trading of one debt for another. The benefit can be a lowered interest rate or smaller monthly payments. In recent years, this kind of debt-swapping has become popular thanks largely to the strife in the global economy, leaving home owners unable to meet the demands of a loan taken out before the UK and US recessions.

Home loan rates, comparisons, mortgages, and more. Save money on your home loan today, visit Home Loans.