Getting Approved For Your First Mortgage
Buying your first home isn’t as easy as hiring well-qualified Maryland movers. You’ll have to start preparing well in advance and stay up-to-date on the latest developments right up to the moment that you’re finally awarded with your mortgage loan. While the current housing market might be a bit easier to navigate than it was a few years ago, there’s still evidence of the mortgage and economic crisis. Depending on your current credit situation, you’ll either have an easier time securing a loan or a harder time. But thankfully, there are certain things you can do to approve your chances.
Ingredients for Approval
Before you get your hands on your first mortgage application or start looking at Maryland movers, you need to fully prepare yourself for the mortgage process. You’ll need to find out what your current credit score is, how much you make each month, what you owe for all of your debts and how much money you have to spare for your new housing budget.
Your Credit Score
Get ahold of your credit history and your credit report to make sure that there aren’t any discrepancies that you need to correct. When you first start applying for mortgages, you might want to think about subscribing to a monthly service that will send you a credit monitoring report. This kind of service usually costs around $20 a month and you can end it once you’ve finally closed on your first home.
In regards to your credit score, you’ll want to make sure that it’s at least 675 before you start applying for mortgage loans. It might even be better if it’s above 700. If your score is less than 675, you might find it nearly impossible to receive approval for a loan. Either that or you’ll have to find a co-signer. Something else to think about is that a low credit score equals a high interest rate, which is the same as throwing hundreds and potentially thousands of dollars out of the window each month. One more thing you’ll want to do is avoid applying for a new line of credit a few months before you apply for a mortgage loan since it can look suspicious to lenders.
Debts and Income
Be prepared to show at least two weeks’ worth of income to your lender. If you work for yourself of have an income that varies from week to week, you might have a harder time with the underwriting process. Lenders want to know that you have enough money to pay for your mortgage each month, and borrowers who don’t make a steady amount of money each month might not be as trustworthy as those who do. In some cases, you might have to present past tax returns in order for the lender to see what you average each year.
You’ll also want to pay off as many loans and debts as possible before applying for a mortgage loan since they can limit how much you’ll be able to borrow. If it’s not possible for you to pay off these loans, then avoid taking on any new ones in the months leading up to applying for your loan.
When it comes to your budget for a new home, it’s a good idea to make it so that your house payment is no more than 35% of your pre-taxed income.