Now that you’ve decided to become a homeowner, it’s time to consider your next steps. Being prepared for the application process will help streamline the application and speed up the approval process. You can also take steps to ensure you get the best loan possible. These measures will help you find a loan company that’s right for you.
Know Your Credit Score and History
Take a moment to review your credit report from each of the three main reporting credit bureaus: Experian, TransUnion, and Equifax. You’re entitled to one free credit report every 12 months and can find these bureaus by visiting annualcreditreport.com. Comb through your history thoroughly to check for any errors or surprises and delinquent accounts or late payments.
If you owe a lot on credit cards, it’s to your benefit to get your amount owed under 30% of the available credit limit. It’s also essential to make payments on time. These are two of the best ways to improve your overall credit score. Lenders look for borrowers who pay their debts on time because it makes them more comfortable loaning you money. It also helps you get the best rate possible, with lower interest rates going to those with higher credit scores.
You’ll also want to examine your debt-to-income ratio. Most lenders require this ratio to be less than 43%, although some lenders will allow as high as 50%. You should avoid taking out any new loans or making large purchases for at least three months before you plan to apply for a mortgage. Your lender can pull up your credit report throughout the entire approval process, so stick to this spending rule through closing.
Know Your Budget
Before you start shopping for your dream home, it’s essential to know just how much home you can afford. Potential lenders will look at your revolving debt and outstanding loans but don’t always consider all the expenses you incur each month. You’ll want to factor in expenses such as taxes, homeowner’s insurance, utilities, gas, car payments, car insurance, groceries, and any other monthly fees you have. Knowing what you spend will provide you with a more accurate estimate of what you can afford for a mortgage.
When calculating an estimated mortgage payment, don’t forget to include fees such as mortgage insurance. It’s better to overestimate your expected mortgage because if you cut it too close, you might find yourself with a monthly payment you can’t afford. This can lead to missing payments and possibly losing your home to foreclosure.
Know Your Mortgage Options
It’s in your best interest to learn about each mortgage option and whether you qualify for them. When purchasing a mobile home, for instance, you can apply for a chattel loan that allows you to place your mobile home on land you lease, on land you own, or in a mobile home park. The loan follows the structure if you move it. Chattel loans typically process quickly, sometimes in as little as 30 days. While they might have higher interest rates, chattel loan amounts are usually lower, providing you with affordable options.
Other options include loans backed by the government, which typically require much lower down payments. You can apply for either a Federal Housing Administration (FHA) loan or a VA loan for your mobile home. Private lenders, such as banks and financial institutions, offer these loans with an added sense of security to the lender. An FHA loan requires as little as a 3.5% down payment, and at Cascade Financial Services, we offer VA loans with low rates as well.
When comparing types of mortgages available to you, consider aspects such as down payment requirements, interest rates, closing costs, associated fees, and mortgage insurance requirements. These are all deciding factors in the best type of mortgage for you and your budget.
Know the Prequalification Process
If you’re ready to start the road to homeownership and begin the prequalification process. A prequalification, and your Prequalification Letter, allows you to shop for the home of your dreams while staying within your budget. It lets the salesperson at the showroom know you’ve been prequalified by a mortgage company and eliminates the need for each builder you visit to pull your credit again. It also speeds up the overall process once you find a home you’d like to purchase. A prequalification is an initial step and does not require a lot of documentation, but it is best to have these documents ready:
- Driver’s license or government-issued photo identification.
- Social security numbers of all borrowers.
- Thirty days’ worth of pay stubs or proof of income.
- Two years of W2s and federal tax returns.
- Bank statements from the past two months.
- List of all financial accounts, including retirement, 401(k), checking, and savings.
- Employment and income history, including employer contact information.
- Down payment information, including the source and amount.
- Information regarding any legal judgments or liens against all borrowers. This includes bankruptcies, foreclosures, lawsuits, collection accounts, and IRS actions.
If anything changes during the process, contact your lender to disclose the new information. Also avoid opening new accounts, moving money around, or changing jobs during the home-buying process.
Know Your Lender
You want to find a lender you can trust. Buying a home is a considerable investment, and you want to be confident that the mortgage you come away with is the best one for you and your needs. The knowledgeable team at Cascade Financial Services is ready to guide you through the process of owning your new manufactured home. We have the experience and expertise to get you into the home of your dreams.
If you’d like more information about the loans we offer, including chattel, FHA, and VA, reach out to us today. You can send us a secure message through our online service or call us at 877-869-7082. Our team looks forward to working with you on the road to homeownership.