Applying for a mortgage the first time you purchase a home can seem daunting. But I have good news! Many first-time homebuyers successfully complete mortgage applications. So you have no reason to fret if you're well prepared. Here's how to prepare for your first mortgage application.
Build Up Your Credit Score
You don't need a perfect credit score in order to purchase a house, but you should have a somewhat decent one. The better your score is, the more advantageous mortgage offers you'll qualify for.
As soon as you begin talking about a home purchase, start to work on building up your credit score. As a general guideline:
You may be able to make substantial progress within a few months, or you might have to work on this for a year. Get started right away, though, so you can be in the best position possible for a mortgage when the perfect house becomes available.
Check Your Tax Returns
A mortgage lender will verify much of the financial information that you provide by checking your tax returns. Make sure you have recent tax returns readily available, so they can be sent into the lender as soon as requested. Promptly sending in tax returns will ensure your application moves along as quickly as possible.
If you're self-employed, you may also need supporting documents that corroborate your tax returns. An accountant can help you find out what supporting documents might be requested, and make sure those are likewise ready to submit.
Get Pre-Approved
Many home sellers will only consider pre-approved offers or all-cash offers. Get pre-approved with a lender shortly before you start looking at houses, so you can make a competitive offer as soon as you find a house that you want to purchase.
Check for Special Programs
You may qualify for special government programs, depending on your own situation and the property that you're interested in. Programs for veteran homebuyers and properties in rural areas are often available, and some organizations also have first-time homebuyer incentives.
Save Up a Downpayment
How much you have to put down at the time of purchase depends on your mortgage program and the cost of the house you're buying. Be prepared to put something down, because you may have to pay thousands of dollars at the time of closing. Begin saving up as much as you're able to, so you can make the largest downpayment that you're able to afford. Click here for more info.
Share24 January 2022
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