If you're planning to buy a house soon, one of the first steps to take is to find a mortgage lender and get pre-approved for a home loan. If you aren't sure if you'll qualify for a loan, there isn't much use in house hunting because you could be disappointed if you can't get a mortgage. Here are some tips for getting a mortgage for your home.
Decide On The Right Mortgage
You have different options in home loans. You might want a VA loan, private mortgage, FHA loan, fixed-rate mortgage, or variable-rate mortgage. A mortgage lender is usually able to offer you a variety of loan types. After looking at your financial data, the lender may even suggest the right type of loan for you. Things like your credit score and amount of down payment will affect the mortgage you can qualify for.
Have A Large Down Payment
It might be hard to save money for a down payment, but the more money you have, the easier it will be to buy a home. A large down payment helps you qualify for more types of mortgages and it can reduce your monthly payments. Save as much money as you can before you buy a house because you'll have many expenses you may not consider. In addition to the down payment, you'll need to cover closing costs, inspections, and other expenses. Plus, you may need money to clean, paint, and repair the home so it's ready to live in. Overestimate the amount of cash you'll need in savings for buying a house so your finances will look more favorable to a mortgage lender.
Don't Make Life Changes
When you're pre-approved for a home loan, that decision is based on your finances at the current time. When you're ready to actually buy a house, you have to qualify all over again. If you change jobs, buy things on credit, or miss a credit card payment, you could ruin your chances of getting your home loan. Once you've been pre-approved for a mortgage, don't change anything about your work situation or your finances until after you've closed on your new house.
Gather All Your Financial Data
The hardest part about applying for a mortgage is the paperwork. The mortgage lender will pull your credit report, but that's not the only thing that is factored into the decision to approve your loan. Find out what documentation you'll need so you can present it all on the day you apply. If you don't have documents you need, then you'll have advanced notice of the documents you need to collect in the coming months until you're able to apply again. Some things you might need include proof of timely rent payments, list of assets, list of debts, proof of debt to income ratio, and proof of income.
You'll need to supply forms such as your tax records, bills, and income stubs as proof of the claims you make. So, if you're looking into buying a home in the future, keep your financial details organized and up to date so you'll have an easy time gathering what you need to give to the lender.
Share17 February 2019
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