How to get new home loans

Whether you are purchasing a new home loan or looking for refinance loans, getting new home loans can be a challenge. After the foreclosure and sub prime lending crisis that occurred in 2008 and 2009, bankers have become more stringent on requirements for home refinancing or home loans and you must show that you aren't a credit risk if you want to refinance homes or get the best refinance rates.

Home appraisal

One of the first and most essential step to getting a refinance home loan or a loan to buy or build a new home is to have the home appraised. A bank lends money for a home as a secured loan. The home is the collateral or security, because if you do not pay, the bank can turn around and sell the house to recover the losses. If the home is not worth what you want to borrow, the bank is not going to be willing to lend you the money. For instance, if you owe $100,000 on your home and it is now worth only $90,000 because of declining property values, refinance companies are not going to let you refinance your home unless you have the extra cash to pay off the difference between the loan value and the home's worth. In most cases, a home actually has to be worth at least 20 percent more than what you are borrowing.

Credit and Income

In addition to the home being valued high enough, you also need to be sure that you have the other qualifications the bank is looking for if you want a home loan. This includes a good credit score and proof that you have income that is reliable. Credit scores are based on payment history and credit use. So, you'll need to be responsible with credit and pay on time if you want to get a home loan.

Explore your options

You should apply for home loans at several banks to have the best chance of getting approved or of getting the best home loan rate. You can apply for a home loan online, at your local bank, or at your local credit union. A mortgage broker may also be able to help.