Are you hoping to buy a home in Utah soon?
First-time home buyer loans are specifically designed for people who have never been homeowners. Often backed by government agencies, these mortgages feature benefits like low down payments and relaxed eligibility requirements.
However, meeting certain criteria is essential to be approved for financing. Lenders take several factors into account, including income stability, creditworthiness and cash reserves, before extending any loan. If you need to borrow money to buy a home and you want to show lenders you can afford to repay a loan, speaking with a mortgage professional is the best way to get advice based on your unique situation. But in the meantime, the following guide may prove helpful.
Examine Your Current Financial Circumstances
A critical assessment of your finances is the first step to getting mortgage-ready.
Begin by looking at your credit report, available for free at AnnualCreditReport.com. Any negative marks – like past-due accounts or unpaid bills — could affect your application. Check your credit score, too, as lenders require borrowers to meet a certain threshold before extending a first-time home buyer loan.
Next, calculate your debt-to-income (DTI) ratio. This is easier than it sounds, as it’s simply a comparison of how much you pay out each month to how much you bring in. Generally, mortgage lenders like applicants with low debt relative to their earnings.
Consider how your bank account looks as well. Mortgage lenders typically want to see at least three months of statements to confirm that you are responsibly managing your money. If you have regular overdraft charges, you won’t seem like a strong borrower.
What You Can Do to Improve Your Eligibility
Once you understand where you stand financially, you can focus your efforts on improving your eligibility for a first-time home buyer loan. As for what to do, taking any or all of these steps can help you look strong to a mortgage lender:
- Lowering your debts by making extra payments or negotiating with creditors
- Increasing your income by asking for a raise or taking on freelance work
- Reducing your discretionary spending to save for a larger down payment
- Dropping your credit card limits, as that translates to lower minimum payments
Talk to an Experienced Mortgage Professional Today
If you’d like to become a Utah homeowner in the near future, the best time to speak with a mortgage professional is now. The friendly and knowledgeable team at Intercap Lending can assess your situation and give you practical advice on how to put your best foot forward when applying for a first-time home buyer loan. Contact us today!