Common Expenses Your Home Loan Covers
For homeowners across the U.S., there can be many reasons to apply for a home loan. First-time homebuyers may be looking to fund needed home renovations of their “fixer-upper,” while experienced homeowners may need the finances to conduct home improvements on their existing residence in the hopes of putting the house on the real estate market. No matter the reason or type of loan being considered, there are a number of factors that could affect the eventual loan amount and loan terms.
Here, we will look at the home loan, or mortgage, process, as well as a few common expenses that the payment amount can cover. With a little due diligence and creativity, a home loan can go a long way in helping homeowners, no matter their financial situation.
Learning the Home Loan Application Process
First-time borrowers have to go through a comprehensive application process with their mortgage lender. If you’re familiar with conventional loans or have ever taken out student loans in the past, some of the steps may seem familiar.
For example, your home loan rates will largely depend not only on the lender you’ve chosen, but also on your own financial situation, income ratio, and a full credit score report to assess your potential credit approval. Of course, additional information is required for the lender to assess possible loan amounts, as well as the current mortgage rate, monthly payment amount, and potential interest rate.
If your current finances and credit rating aren’t the greatest, don’t panic! The best mortgage lenders can guide you towards possible options. For example, a spouse or domestic partner may act as a co-signer on the home loan, increasing your chances for credit approval, as well as the down payment, the lower interest rate on the mortgage payment, and potential qualifications regarding mortgage insurance.
While your monthly mortgage payment and the life of the loan do depend on these factors, your chances of a mortgage loan are not completely determined by your previous credit history. You may also qualify for federal aid through the Federal Housing Administration (FHA). Using an FHA loan may be in your best interest, as the government agency can weigh the options of current mortgage rates in determining the average rate applicable to your financial situation.
Likewise, much like a mortgage lender, the FHA can utilize a mortgage calculator in helping select a loan type and loan limit, the loan terms, payment amount, and such important add-ons as homeowners insurance at a lower rate.
Best Uses of a Home Loan
Applying for a mortgage isn’t just for first-time homebuyers. Experienced homeowners who have been in their residence for many years may also consider a mortgage for necessary home improvements and remodel projects.
Among the most popular remodeling projects are exterior renovations, such as the roof, windows, or a new paint job, along with a full kitchen remodel or the addition of a “dream bathroom.” What’s great about any of these options is that the homeowners may enjoy the beautification of the home now, yet also increase the “curb appeal” and overall property value at the same time.
According to the Pittsburgh-based luxury bath specialists, Lux Bath, bathroom remodels are among the first things that potential homebuyers will look for when inspecting a potential purchase. In effect, by raising the potential home price of the household, these home improvements are sound financial investments.
If the home ever goes on the real estate market, new accessories, such as a luxury bath, new shower walls, and tile work all attract potential buyers. When it comes to taking out a mortgage, remember that the expenses covered by the financial assistance can go a long way in making your existing house look and feel like an entirely new home. Consider installing a new kitchen or new luxury bathroom as a long-term investment. With this strategy in mind, you can truly make a mortgage work to your benefit.