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Factors in Getting a Home Loan

Getting a home loan can be a tedious process if you don't know how to go about it the proper way. There are a number of different methods that people have used over the years to come up with different home loans and while some of them were okay methods, others turned out to be poor methods. Considering that today's home loans are done formally through a bank, you might be wondering exactly how a poor method can exist. Well, it is quite true that with the formalized nature of many loans today, that it is much harder to come up with a bad way to get a loan, but at the same time it is also possible to come up with ways to get loans much better than normal. To do this, it requires you to understand exactly what factors are involved in getting a home loan.

Credit Rating

Whatever type of home loan you are looking into getting, the credit rating will ultimately affect how good a deal you can get. When you are thinking about the different types of loans that are available on your home and thinking about which one is best for you, you also need to be thinking about how a poor credit rating might factor into that deal getting changed without you being able to do a thing about it. Unfortunately in some cases, credit ratings are the 'be all' and 'end all' of the financial world so unless you have at least a net plus credit rating, you are going to find yourself at a disadvantage in almost every single financial discussion or negotiation you enter into.

Recent History

While the overall credit rating certainly does play a role in how your deals are managed, at the same time your recent history does play into it as well. More specifically than just your recent history, your recent history in regards to home loan deals if applicable is of great interest to potential creditors. For example, if you have paid off part of a mortgage and have done so diligently while some of your other loans (i.e. credit cards) might have been neglected, some creditors might still be willing to grant you a home loan based on the fact that your other already existing home loan is going well. So while the credit rating is important, there are ways around it if you to think in a creative sense.


Collateral is an important point to a certain degree. Assumedly, you will be putting your home up for collateral and therefore the idea of collateral itself is not going to be a problem when it comes to your home loan. What will be a problem on the other hand is the idea of how much you can get for your collateral. Unless you are going for a mortgage, the original home loan, chances are you are going to be tempered by some money already tied up in a partially paid mortgage (if you happen to be going for a refinance, home equity loan or any other type of home loan that is not a mortgage). Therefore, the collateral does not affect your ability to get the loan in this case, but it might have a large affect on the amount you get.

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