Most homeowners dream of building a smart home. Who wouldn’t want to go home to a house that is sustainable, energy-efficient, accessible, and safe? There are some of the best reasons why a lot of homeowners want to make their homes smarter. However, a tight budget is often the leading cause of delays when making the transition.
If you want to upgrade your home by buying smart home technologies, then consider applying for a mortgage loan. There are tons of mortgage loan options to choose from that vary in rates, terms, and benefits. Take Home Equity Loans, for example. When you get approved of a Home Equity Loan by any Houston mortgage lenders, you can get a lump sum of cash. You can use the funds to finance many endeavors, including your plan of building a smart home.
HELOC also allows you to tap on your equity. With this type of mortgage loan, you can draw the funds as you need them, and pay for the interest-only during the loan period. There are lots of other mortgage loans that can help you make your dream smart home a reality. If they have one thing in common, is that you need to qualify first before you can access the funds.
Good Read: What Is Home Equity?
Do you have plans on applying for any mortgage loan to help you build your smart home? Then it pays to prepare yourself of the common requirements needed to make you eligible for the loan. Some of these are as follows.
Stable Employment And Income Source
Houston mortgage lenders will check on your employment history and income to see if you have the ability to pay for the loan. Most will require at least two years worth of pay stubs and income tax returns.
Good Credit Score
The minimum credit score requirement varies depending on the type of home loan you’ll be applying for. If you have a bad score, you can still qualify for a loan. This will be dependent on your lender’s discretion, and what compensating factors, you may need to meet.
Good DTI Ratio
The ideal Debt-To-Income Ratio is below 36%. However, there are Houston mortgage lenders who will consider your application even if you have a 43% DTI ratio.
Enough Home Equity
If applying for a Home Equity Loan or a HELOC, then you need to have enough equity to qualify. Most lenders require at least 15%-20% equity, which one can determine during a home appraisal.
Good Read: What You Should Know About Home Appraisals
LTV Ratio refers to your Loan-to-Value ratio, which the available value or your home in percentage. It is advisable that you keep you borrow less than 80 of your LTV ratio. However, some lenders will approve your loan application even if it exceeds the 80% ideal LTV ratio.
There are just the typical requirements you will need to have to qualify for a HELOC or Home Equity Loan. Take note that your home will serve as a collateral when you apply for such mortgage options. Before making a final choice, check other financing options to see which one will best suit your needs.