Submitting your first mortgage application may fill you with a sense of excitement initially, but anxiety may set in as you anticipate the costs. Lenders will look at your application closely and examine everything from your credit score and report to your employment history and income levels.
Get all your ducks in a row before applying, to ensure you present yourself in a positive. Here you will find a few effective tips to qualify for your first mortgage.
Tip #1: Assess Your Finances
Think about how much of a mortgage you can afford. Being realistic can increase your chances of securing financing, namely because it will prevent you from applying for exorbitant loans. Having a sense for your budget will also help you choose the loan terms that fit your finances.
Tip #2: Review Your Credit Report and Score
Your creditworthiness plays a pivotal role in whether you are approved for a mortgage and the terms associated with the loan. Start your house hunt by examining your credit report and score at least six months before you apply. This will give you enough time to dispute errors on your report or overcome any other blemishes that may be dragging down your score.
Tip #3: Save For A Sizable Down Payment
The size of the down payment will impact the amount of your monthly payments, so try to put down as much as you can. Keep in mind that a down payment less than 20 percent, may mean that you have to purchase private mortgage insurance.
Tip #4: Organize Your Paperwork
Lenders will scrutinize all of your financial, tax and employment documents. Be ahead of the game on this may help speed up the process and close any gaps in your application.
Tip #5: Do Not Apply For New Lines Of Credit
Avoid seeking new credit cards or personal loans before or during the mortgage application process. New applications for credit, even retail or gas cards, may put a small dent in your credit score and jeopardize your chances of securing the best rates.
Purchasing your first home is an important milestone in life. Planning ahead can help ensure the process goes through smoothly.