You can take some of the surprises along the way by knowing what lenders are looking for during the mortgage application process. Here are five helpful tips on how to qualify for a mortgage:
Assess Your Finances
Before you start looking through real estate listings; It is important to understand how much you can afford and what type of mortgage loan you can afford. It is important that you take the time to understand the costs and monthly obligations of home ownership, including property taxes, insurance and other monthly expenses.
Review Your Credit Score and Report
Your credit score will play a role in your mortgage and how it will influence your interest rate and terms of the mortgage. If it is possible, try to have a look at your credit report at least six months prior to applying for a mortgage. During the time between looking at your report, try to overcome any obstacles that might be having a negative impact on your score.
Save for a Down Payment
The amount that put down for a down payment impacts what your monthly mortgage payments will be in many ways. This not only reduces the size of your loan, but in a competitive real estate market it could also be the difference between your offer getting accepted or rejected. It is important to pay down your debts and save what you can to have a strong debt to income ratio.
Organize Your Paperwork
By not only looking at your credit report, but by having copies of your taxes, financial records, and employment documents on hand. This can help move the mortgage process along quickly. Having around 12 months of documentation will help make the approval process go much smoother. It will also make sure that any information that lenders are viewing is error free and help to support the fact that you are a good candidate for the job.
Avoid Lavish Purchases and Job Changes
Don’t run out and make a big purchase before you buy a home because this will impede the amount that you qualify for. It is also important to try and not change your job within six to eight months, as lenders might think it is a little off putting, however if it is a natural progression, it will be looked at differently.