How to get a mortgage
How to prepare for a Home Mortgage Loan
It’s important to know what you’re getting into before securing a home mortgage. Here are a few simple things you should do to be sure you’re completely prepared. By following these tips, you can avoid some of the pitfalls that can cost you time, money or even the home you want to buy.
1. Make sure you’re ready to buy a home. Do some basic personal accounting to find out your financial state and figure out if you can afford to purchase a home. Also, how much can you afford?
2. Find out your credit scores. Lenders use what is called FICO scores to evaluate your ability to repay your loan. Take the time to understand this score and more importantly how they influence the offers you’ll receive. Have a mortgage lender pull your credit scores and ask them to help you figure out what you need to do to prepare for a home loan.
3. Reduce your debt-to-income ratio. Besides your FICO scores, lenders also look closely at your debt-to-income ratio. By comparing your mortgage debt obligations against your monthly income lenders can determine if you are capable of taking on more debt. It’s a good idea before applying for a mortgage to reduce your debts by paying down credit card balance.
4. Slow down on borrowing. Applying for a new loan or credit card initiates what is called a “hard pull” on your credit report, which can impact your credit score negatively. If you’re going to buy a home it’s best to hold off on applying for new lines of credit in the six to 12 months prior to securing a mortgage.
5. Organize your paperwork. There’s nothing worse than waiting until the last minute to organize your paperwork, which may delay the application process. You may also miss out on a chance to buy your perfect home. Ask your mortgage lender what documents you need and get them together before you go into fill out the paperwork.
6. Find a mortgage that makes sense for your financial situation. Look closely at the fine print of the mortgage you’re applying for and make sure it fits your situation. If you can’t find a mortgage that suits your situation, it is best to hold off and revisit the situation later.
7. Make the time to get preapproved. Preapproval occurs when the bank gives you a preliminary okay on your loan and tells you approximately how much you qualify for.
This one detail is sometimes what makes the difference between you and another prospective buyer. Make sure you do what you need to get preapproved before you start shopping for a home.
Do you have additional questions or want to be pre-approved right now? Use the contact form below to contact a recomended loan officer in our area.