Learn How To Get A Home Loan

May 2, 2011 - PRLog -- Being approved for a home loan is not so difficult but depends on a variety of factors such as level of income, job stability, savings, amount of down payment, credit history, and others.

First, crediting institutions favor applicants with an employment history of at least 2 years. It is best if the borrower has been employed at the same workplace for 2 consecutive years. Gaps in employment and frequent job changes reduce the chances of being approved for the loan. The credit rating of the borrower is also an important factor when his creditworthiness is assessed. Lenders look at the FICO score in order to assess the borrower's creditworthiness. While the formula for computing the score is a complex one, a number of factors are taken into account such as bankruptcies, judgments, pay history, collections, as well as residence and job stability.

It will not be difficult to obtain the loan if your monthly payments toward mortgages, auto loans, student loans, and credit cards are no more than 41 percent of your total gross income. The debt to income ratio is also important and generally, the less you have borrowed, the better the ratio.

The purpose of the home loan (http://www.yourloan.ca/home-loans--credit) is an important factor that determines the outcome of the application process. For example, if the borrower applies for a construction loan, the lender will usually require a down payment. A good credit history is also a typical requirement. Down payment is not a requirement in all cases, and some creditors offer zero percent down mortgages. While getting a home loan will not be difficult, the repayment terms will not be as favorable. Even a down payment of 5 - 10 percent helps reduce the interest rate on a home loan. The type of property is also important when assessing an application for a home loan. For instance, applicants who seek to buy a condo or manufactured home will pay higher interest charges. Those who want to buy a condo or a 4-plex in a high rise may be required to provide collateral. Commercial mortgages can be obtained for properties that consist of four or more units.

Applicants who are overloaded with debt are unlikely to be approved for a home loan, given the recent peak of foreclosures. Borrowers who own a house are favored by the creditors as they are more committed to repaying their loans. In addition, no-down loans are most often an option for borrowers with an excellent or very good credit history.

Applicants who run a business will be required to provide a history of the business and show the length of time their company has been in business.

Visit Canadian home loan types and learn more about home loans. - http://www.yourloan.ca/loan-articles/

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