Getting Capital For Your Home- The How!

Posted by Lorraine Ross on October 30, 2007

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So you’ve found the home of your dreams and now you need to figure out how to go about getting capital for your home. Being able to afford to make a monthly house payment is not the same thing as getting capital for your home. It is important to plan ahead, so that you can be assured of qualifying for a mortgage with excellent terms when you are ready to purchase a home.

Fortunately, you do not have to have a huge down payment to get capital for you loan. Many lenders offer low-down payment loan options and even zero down payment offers for buyers who have very clean credit.

If you want to be sure that your mortgage broker or loan officer is very happy to offer you a loan to purchase the home of your dreams, here are five simple tips you should follow.

1. Credit History

The importance of having a strong credit history cannot be underestimated when it comes to getting capital for your home. The strength of your credit history impacts whether or not you are eligible for a mortgage loan. The best way to

While there are a number of home loan programs that will accept people with less than spotless credit, the terms are not generally favorable. If you have bad credit and are lucky enough to find someone to loan you money to purchase a home, the interest rate is likely to be very high. Additionally, many of the poor credit home loans are variable rate loans, which are very risky.

2. Verified income

Take paycheck records with you when you go to apply for capital for your home. The lender will need to verify your income, to make sure that you have enough cash flow to afford to make your monthly mortgage payments.

3. Down Payment

While a large down payment isn’t necessary for many mortgage loans, it certainly does not hurt to have a down payment. When you are willing and able to put a down payment on your home, it demonstrates to prospective lenders that you are really serious about the purchase.

4. Cash Availability

Many banks will verify that you have sufficient funds in savings to begin making your mortgage payments. You may also need cash for expenses related to closing on your loan. Some closing expenses can be paid from the loan proceeds, but at time there will be out-of-pocket expense.

For example, you will definitely need earnest money to hold your real estate contract. If you cannot come up with the typical $500 earnest money deposit, a bank is going to question the legitimacy of your commitment to owning your own home.

5. Appraisal

Lenders will not loan more money on a home that it is worth. Lenders are overjoyed when you ask to borrow $100,000 and it turns out that your house appraises for $150,000. They are even happy if it appraises for the exact amount of the loan.

What will make a lender unhappy is if the appraisal comes in below the amount of the loan. Making sure that you are not offering more for a house than its market value goes a long way in helping with getting capital for your home.