Buying the home you want can be a difficult and daunting task, especially for a first time home buyer. Home insurance lenders are looking for a good credit score and require a down payment. They check your income and expense documents, and take a close look at your debit to credit ratio. However, you can make the insurance approval process and home purchase easier by identifying and overcoming common barriers.
Here are some of the most important home buying hurdles that you need to address carefully and intelligently when buying your dream home.
- low credit scoreHaving a high credit score is the biggest advantage of getting your home insurance application approved. Lenders consider your credit score as a reliable indicator of how likely you are to repay your insurance. Notable financial institutions such as banks, credit unions, and other organizations need credit scores of 640 or higher. Also, the Federal Housing Administration needs a credit score of 600 or higher. The lower your credit score, the higher your interest rate. If your score is below the minimum, your insurance application will likely be rejected.
- no documentsSubmitting third party documentation to support the details of your insurance application may be helpful. Not only must you list all of your assets but you must also provide a verification of their value. It is essential that your documented income is high enough to convince the lender that you can afford the mortgage payments over the life of the home insurance. You also need to document the source of your closing and down payment funds. The invaluable assistance of competent real estate appraisers can be helpful in overcoming documentation barriers when purchasing the home you want.
- Financial shortcomings: Make sure you can afford a good down payment when purchasing a bank insurance or any other home insurance. Your home insurance will remain on hold until you demonstrate that you can afford the down payment money. In addition, the amount and type of your debt will be closely checked along with your current income. For example, according to FHA requirements, your monthly mortgage payments must be no more than 31% of your gross monthly income. If you exceed this percentage of your income, you must either pay off a certain amount of your debt or increase your current income to meet FHA requirements.
- Low home ratingThe appraisal process and appraisal value play a vital role in the approval of your home insurance. The home needs to be valued by expert appraisers, such as a New York real estate appraiser, to find its exact market value. Lenders will most likely send their appraiser to thoroughly inspect the home and set a maximum insurance amount. If the selling price is greater than the appraised value by a large margin, you may need to find other means to complete the purchase transaction. As a buyer, you are entitled to a copy of the evaluation report and challenge the results if they are inappropriate or conflict with your results.
These are the most common barriers when it comes to buying a desirable home.