When You Need More Time to Prepare for a Home Loan
September 22, 2023
How do you know if you are being too hasty when applying for a home loan? We aren’t talking about whether or not you should buy a particular home or not, but rather whether you as a potential borrower have given yourself enough time to prepare for the application.
Some borrowers need more time on the job, some need more time to save for a down payment, and some may have unique circumstances that require extra time.
When You Need More Time in the Job Market
If you haven’t been working for at least two years, or if you have been working a new type of career for less than two years, a lender may not be willing to take a chance on you without compensating factors.
A higher down payment can be one of those. Outstanding credit may help in this case, as will being in a highly skilled profession. Ask a participating FHA lender about their standards in this area.
When You Need More Time to Come Up With a Down Payment
Not all FHA loan options allow you to get down payment assistance. If you want to build instead of buy, expect to provide your own down payment funds without help.
When You Need to Work on Your Credit
If your FICO scores are low, or if your “middle” FICO score isn’t high enough you may need more time to improve those scores before a lender will work with you. Don’t apply too early if you are still working on your credit.
When You Are Working Out Financials
By this we mean those who have additional considerations such as needing or wanting a co-borrower, or a cosigner.
Does everyone have their financial house in order in such cases? Don’t assume the financial strengths of one borrower will automatically offset the financial weaknesses of another potential borrower.
You should also give yourself more time if you are trying to accomplish a unique transaction such as a renter buying property from a landlord.
Additional considerations may apply in this scenario and you do not want to rush such a transaction. Some of these transactions may require a higher down payment depending on whether the seller meets certain criteria like being a family member.
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Some borrowers need more time on the job, some need more time to save for a down payment, and some may have unique circumstances that require extra time.
When You Need More Time in the Job Market
If you haven’t been working for at least two years, or if you have been working a new type of career for less than two years, a lender may not be willing to take a chance on you without compensating factors.
A higher down payment can be one of those. Outstanding credit may help in this case, as will being in a highly skilled profession. Ask a participating FHA lender about their standards in this area.
When You Need More Time to Come Up With a Down Payment
Not all FHA loan options allow you to get down payment assistance. If you want to build instead of buy, expect to provide your own down payment funds without help.
When You Need to Work on Your Credit
If your FICO scores are low, or if your “middle” FICO score isn’t high enough you may need more time to improve those scores before a lender will work with you. Don’t apply too early if you are still working on your credit.
When You Are Working Out Financials
By this we mean those who have additional considerations such as needing or wanting a co-borrower, or a cosigner.
Does everyone have their financial house in order in such cases? Don’t assume the financial strengths of one borrower will automatically offset the financial weaknesses of another potential borrower.
You should also give yourself more time if you are trying to accomplish a unique transaction such as a renter buying property from a landlord.
Additional considerations may apply in this scenario and you do not want to rush such a transaction. Some of these transactions may require a higher down payment depending on whether the seller meets certain criteria like being a family member.
------------------------------
RELATED VIDEOS:
Consider the Benefits and Risks of a Joint Loan
Borrowers Should Know About the Origination Fee
Everyone Needs to Pay Their Property Tax
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