Purchasing a house will probably be one of the biggest investments you ever make in your lifetime. Keep in mind, though, buying a house is an entire process. The more you prepare ahead of time to apply for a mortgage, the better off you will be.
If you are considering buying a home, you will need to ensure that you take on a mortgage that is within your budget so that your house payment will not stretch you out financially. There are several things you need to do to prepare to apply for a mortgage loan.
Check Your Credit Score
You need to check your credit score with all three of the major credit reporting agencies, including TransUnion, Experian, and Equifax. The higher your credit score is, the better deal you will get on the interest rate on your mortgage loan. If your credit score is not up to par, you need to take steps to improve it before you apply for a mortgage loan.
Check for Errors
In this day and age, identity theft is a real possibility when it comes to your credit report. If you find any errors on any of your three credit reports, you will need to contact the credit reporting agencies so that they can fix the issue.
Pay Off Debts
It is a good idea to try to pay off some of your existing debt before you apply for a mortgage loan. By paying off credit cards, student loans, vehicle loans, personal loans, and other types of credit, you will increase your credit score while also having an easier time making your house payments each month.
Debt-to-Income Ratio is Important
Mortgage lenders will be looking at your gross monthly income as compared to how much debt you have. The debt-to-income ratio you want to strive for is anything less than 43 percent. Also, the lower your debt is, the higher your income level will reach.
Stop Applying for Credit
Try to avoid taking out any new loans or credit cards while you are preparing to apply for a mortgage loan. You should also try to avoid purchasing a new vehicle or taking out other types of loans for at least one year before you apply for a mortgage.
You should start saving any extra income you may have at least one year before you apply for a mortgage loan so you can save up the amount you will need for the down payment on your new home. The larger your down payment is, the better your interest rate overall will be. This will also help you have a more manageable mortgage payment each month.
Pre-Approval is Recommended
Once you have paid down your debt and made sure your credit report is looking good, you can apply for pre-approval for a mortgage loan. This will help you lock in a good interest rate and will show home sellers and real estate agents how serious you are about buying a home.
Contact a Professional Mortgage Lender
Ready to apply for a mortgage loan? Call the mortgage professionals at GetMortgageInfoHere.com. Looking for mortgage rates in Pennsylvania or mortgage rates in New York? We can assist you in locating the best mortgage loan for you and your situation.