The process of applying for a mortgage is not an easy one. There are many things you need to know before taking on the responsibility of owning your home. This blog will go over four essential points that every borrower should consider before walking into their first mortgage application meeting with a lender.
Know Your Credit Score
Your credit score is important to help the lender understand the risk associated with your loan. It's important to know what your score is and how it compares with others.
A high credit score will help you get a better interest rate on a loan, reduce your monthly payment, and decrease the total amount of money you pay in interest over time. Your loan officer will help you pull your credit history and score.
Understand What A Good Interest Rate Is For You
Numerous factors determine interest rates, and what is "High" for others may be relatively low for you. It is essential to understand where you fall on the spectrum and what a reasonable interest rate means for you.
It's also helpful to know that there are many different types of loans out there, so it may be possible to find a loan with lower monthly payments but still have great rates.
Find Out How Much House You Can Afford To Buy
Before you start your home search, it's key to know how large a loan you will be qualified to borrow. Generally, lenders will only lend up to a certain percentage of the purchase price or appraised value compared with your debt and income.
Less debt and higher income will help you qualify for much more homes.
Make Sure That The Mortgage Payment Will Fit Into Your Budget
The most crucial factor to consider when buying your home is whether you can afford the monthly payment. Just because you qualify for a particular loan amount doesn't mean that the monthly payment is affordable.
It's important to consider all aspects of your finances (i.e., monthly expenses) and figure out what type of house payment will work for you on an annual basis. You can then compare this with how much rent would cost to decide if buying or renting makes more sense for your situation.
If you are curious about what that monthly number should be, don't hesitate to give us a call today.
Be ready to submit numerous documents
When qualifying for a mortgage, we will be asking for copious amounts of documentation.
Prepare to submit: proof of income, a list of assets and debts (including mortgage information from your current residence), copies of past two years' tax returns, documentation related to any recent property purchases or transfers, bank statements.
All these documents must be accurate and complete, as we will use these to determine the loan eligibility.
Have questions about the mortgage process, or ready to get started? Click here and speak with one of our loan officers today!