Buying a new house is an exciting journey it changes your life forever. However, it’s not an easy process. There are financial and other obstacles involved. You need to overcome these obstacles to finally get your dream home. Here we are going to discuss the major obstacles so that you can get well prepared before buying a house.
Eligible income restrictions
When assessing your income, only your first job is considered. Many people today do a second job to support themselves financially, and these extra jobs do add significantly to their overall monthly income. However, the second or extra job doesn’t qualify to be included in the overall income assessment.
Also, the fact that many people get the salary in cash when they do the extra job makes this income not eligible as it’s not in their bank account. Even if the person deposits the money in their account afterwards, it’s still not counted. So, if a person’s main job is a bit low paying, then he or she will have difficulty in getting a mortgage.
Strict income-verification standards
Income verification is very strict. There is no low-documentation loan anymore, so it’s trouble for the self-employed borrowers. In many industries, people are paid in cash. This type of income often doesn’t get approved.
It is a great challenge for a mother on maternity leave to obtain a mortgage. Often the mother leaves the job after having a baby. So, the lender needs to make sure that the maternity leave is paid.
Strict credit report checks
Your credit report must be clean. After being pre-approved for the mortgage, if any of your actions affect the credit score negatively, then you will be held accountable for it, and you must explain to the lender.
If you want to get the mortgage, you shouldn’t open any new account, close an account, or miss any payments. You also shouldn’t make any large purchases. Even the slightest drop in your credit score can result in the denial of the mortgage.
High down payment
Not being able to pay the down payment is a major obstacle in buying a house. Sometimes the down payment is too high, and people don’t have that a lot of savings in their account. So, if you have a plan to buy a house, you should start saving money for a down payment many years in advance.
If you get into the hands of an inexperienced lender, then your mortgage application may not be evaluated properly. So, you might not get the mortgage even if you are eligible for it. So, always take time to find an experienced lender.
Nowadays, the lending standards are stricter. Even qualified borrowers are finding it difficult for their loans to get approved. You should be working with an experienced lender, have the down payment ready and keep the credit score clean to get a mortgage for buying a house.
Lending standards are so much tighter these days that even seemingly qualified borrowers are having trouble getting approved as banks try to avoid repeating their past mistakes. If it happens to you, don’t be surprised and don’t take it personally.
By working with an experienced lender, being patient, and perhaps making some changes to your financial situation, you can put yourself in a position to get approved.