One of the dreams most of us have in life is to own our home one day. When you are just starting your working life or just out of the college, it still remains as a dream for a while unless you have a large down payment somehow. As you are establishing yourself in your job, you can start preparing for your home. Here is some ideas to prepare for that first home loan application in your way to owning your home. 

You need to establish an employment record before you can apply for a home loan. The lenders would want to see that you have a steady job and their maximum lending depends on the level of income you have. Usually you can borrow about 3 times of your annual income. Start saving for the down payment, you will want to save around 10-20% of the value of the house you would want to buy. Keep your financial affairs, card and loan payments in order so that you can have good credit score when it comes to applying for a home loan. A good credit score will allow you to qualify for better interest rates as well as increasing the chance of successful home loan application. Start employing budgets in your life. You will need to show to lenders that you can control your expenses in line with your income and afford the monthly mortgage payments. It is a good idea to set up a direct debit for your rent and other main outgoings. Since the monthly mortgage payments would replace the rent you are paying now, it shows the lender how you would pay the mortgage every month. Keep the number of credit cards and other loans to a minimum. You do not want to look like a debt junky. Remember, all the other monthly payments that you are making will be taken into account when the time comes to calculate the borrowing levels you can afford. You will need to verify your addresses for about 3 years back. You may want to register for voters roll, this is a way the lenders can check your address easily. You would better keep some utility bills and letters coming to your address to use them as a proof of your residence.

 If you are keen to get on the property ladder, you want to jump on the earliest opportunity. You do not want to find out at that time that your credit score is not good enough or you do not have enough proof of your previous addresses. By preparing in advance, you can qualify for better rates and your application can be approved faster, easier.

Filed under: Home Ownership and Prices by JS Lee
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The adjustable rate mortgage is a type of mortgage loan that is secured on a property. The interest rate and monthly payments on these types of mortgages fluctuate depending on the base interest rates. These types of mortgages may be very common in some countries, but not much popular in others.

These mortgages are a good starter mortgages for people who plan to move in a few years time. To start with flexible mortgage rates are lower and it can be even lower with extra intensives offered by the mortgage company for the first year or two. Unless the borrower has been offered substantial discounts initially, they have low early payment penalties. So it makes them ideal for people who only plan to stay few years in the house they are buying.

Adjustable rate mortgages are perfect mortgages in the high interest rate environment or when the rates are dropping or expected to drop. The applicants can get the home they want now and when the interest rates are down they can refinance this mortgage. On the contrary, they could cause financial difficulties for the home owner when the interest rates are rising or has risen quite much since the mortgage taken.

One of the disadvantages to adjustable rate mortgages is that they are often sold to people who are not experienced in dealing with them. These individuals may not be able to see the dangers with the rising interest rates. They may have been taken by the lower rates these mortgages come in comparison with the fixed rates. However, the consumers can protect themselves by placing a cap on the interest rate increase. In other words, the lender agrees not to increase the rate more than pre-agreed amount when the interest rates go above that amount. Capping provides a safety net in this case.

Adjustable mortgages would be preferred by the people who want to borrow little bit more than they qualify with a fixed rate mortgage. Since the interest rates are lower, the monthly payments would be lower, too. This in turn allows people to borrow more based on their income.

Filed under: Mortgage Rates and Fees by JS Lee
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There are things you can do to improve your chances of getting a home mortgage loan. And there are times that the outcome of your application is pretty much depends on the current trend of the house prices and the economy.    

When the economy is booming and the house prices are on the up, it is much easier to get a home mortgage loan or refinance home mortgage loan. The lenders are positive; the increasing house prices give them extra cushion of safety and booming economy reduces the possibility of the borrower loosing his job. The borrower is quite keen to get in the housing ladder, too. There are not many houses for sale at this time that is why the prices are driven high and you may be gazumped if you are not quick.

On the other hand if the economy is shaky and the house prices falling, the lenders become extra careful. They may even require you to pay higher down payments. Certainly the 95% mortgages start disappearing. They look into your income and job much more in detail and may require letters from your employer to confirm your position is safe in the firm. The income multipliers will start going down as well, meaning that you can now borrow less for the income you have.

The current economic conditions play a very important part in any mortgage application. This is an external condition that you can not influence. That is why the timing of your application is very important. In good times as we now well aware even the dodgy people got mortgages. In fact, they have been encouraged to get mortgages. A perfectly good application could be turned away in bad times, simply because the lender has cut its lending drastically.

Unfortunately, this is much clearer in the business loans and commercial loans. When the times are good, the bank manager is your best friend. He encourages you to take risk, informs you that he is there for you if you need any loan. You may be still doing pretty well, but when the economy start going downhill there is nothing your bank manager can do to help you. He will find out pretty soon that the decisions started to be taken by the head office and pretty much nothing is coming back from the head office.

 I guess going with the flow increases your chances of success in life. Trying to row against the current at least makes you very tired. If you have been trying to find a business loan or your home loan application is going nowhere in difficult time, this is why. If you need the loan desperately, you will need to try harder and be well prepared. You may as well have to reduce the amount you borrow. If you are in a position to choose the timing of your home purchase or refinancing, you will be much better off by getting your loan application in the right time.

Filed under: Articles, Home Mortgage Loan by JS Lee
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Hi everyone,

I am JS Lee. I have worked over 4 years as a mortgage and insurance broker and gained quite an inside into the world of finance. Adding this to my degrees in finance, I felt that I should share my knowledge and experience with anyone who is willing to take the time to read my posts.

Not only I will write my experiences and opinions, I will research into the subjects and try to answer some confusing terms and issues.  I hope you will find my posts useful and thank you for reading.

Filed under: Personal by JS Lee
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Welcome to WordPress. This is your first post. Edit or delete it, then start blogging!

Filed under: Personal by JS Lee
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