Buying a home is a huge accomplishment in one’s life! But before all the real excitement starts, you’ll have to ensure your financial status is in order.
Qualifying for a mortgage is one of the most important parts of building a home. It’s a smart idea to seek out the help you need before and during this process to get organized financially and receive approval.
Once you receive approval on your mortgage, you can start planning for the home of your dreams. Here are some tips on how to get qualified for your first mortgage on a new construction.
Financial Data Needed to Qualify
Buying a home is usually the biggest financial decision that anyone will make. With this big decision, you have to make sure you’re able to afford the monthly mortgage payments. You may have already gotten a mortgage preapproval, but that’s different than qualifying.
In order to qualify, you need to have an asset statement and be able to show proof of income. An asset statement is simply what you own and what you owe. If you have money in the bank and a student loan, you would need to bring documentation of that to the loan qualification meeting.
The more financially stable you are, the better loan options you’ll have. A lot of people are surprised by how difficult it can be to qualify for a mortgage. Be sure you understand the recent mortgage rate increases and what this could mean for you specifically.
Choosing a Loan Option
When buying a home, you’ll have the option of choosing the type of loan you want – fixed or variable rate. This is a major decision because your home loan will be around for decades. Some people prefer to use a variable rate on their mortgage. This allows you to get lower payments in the beginning.
However, a variable rate on your mortgage carries some risks. Even if you receive your mortgage at a very low rate, at some point these interest rates could rise. That could leave you in a bad financial position if you have a variable rate on your loan.
You can also choose the term length you want on your mortgage. As a general rule, the longer the loan term, the lower the monthly payments are going to be. Many people prefer to stretch the payments out as long as possible.
Getting an Appraisal on Your New Home
New homes are slightly different than buying a resale home when it comes to a mortgage. Current homes are usually easy for appraisers to understand the value of. However, newly constructed homes have a lot of unique features that appraisers need to asses. Before you can get an official approval on your mortgage, someone has to come appraise the home.
Applying Online for a Mortgage
With the new advances in technology in the market today, there are new ways to apply for a mortgage. Some people prefer to go online to start the application process on a mortgage. This is a great way to save both time and the hassle of bringing in a lot of paperwork to a bank.
However, if you prefer to work directly with someone on big financial decisions, it may be better for you to apply in a traditional bank. Assess your situation and decide what’s best for you. Some home construction companies will have their own financing options that you can choose from.
Next Steps in the Process
If you’re ready to start building your dream home, there are several things you need to keep in mind. One of the most difficult parts of building a home is qualifying for the mortgage, but if you have all of your financial data ready, it’s usually a smooth process.
Finding a company that you can trust during the process of getting your first mortgage is essential. Never settle with a company that you do not trust. Some home builders will have financing options that you can choose from. This helps you keep all of your decisions with one company during the building process.