If you are applying for a mortgage to buy a home, doing your homework in advance before you submit the application means that you will stand a better chance of getting accepted at a desirable mortgage rate.
According to mortgage experts, it is a good idea to gather up all of the needed documents in advance before launching your house hunt, as this will make the application process a lot easier.
The housing burst has resulted in much harder lending standards, which means that it could possible take weeks or sometimes even months to secure a loan.
Here are a few important steps that you should take in advance:
Consider What You Can Really Afford
Before you start the entire house hunting and mortgage application process, you should consider what you can really afford to buy.
It might be tempting to buy a house at the upper end of your price range, but consider the fact that it will be more of a struggle to make your mortgage payments and it will take much longer to pay down the mortgage. Assess your finances and be honest with yourself.
Buying a home that is more comfortably within your price range will ensure that you can easily manage your monthly budget over the years.
Save Up A Down Payment
The bank will want to see that you are able to make a down payment of at least 20% of the value of the home.
In order to save up this amount of money, it will be easier if you start in advance and save a small amount every month. The more you can pay for a down payment, the less your mortgage will be and the more money you will save over the length of the loan.
Do Your Research
Take your time to do lots of research in advance and seek out impartial advice on the mortgage market. There are so many options to choose from and a lot to consider, so the more knowledge you have the more prepared you are to make an informed decision.
Consider Your Credit
Before applying for a mortgage loan, you should take a look at your credit report.
Your lender will look at it when you are making an application and they will use it to consider whether or not to offer you the loan and what type of interest rate to give you. If you spot any errors or issues with the credit report, it is a good idea to get them fixed now before you apply.
These are just a few things to consider before applying for a mortgage. To find out more about mortgages or buying a home, contact your trusted mortgage professional today.
Silas Knight says
You have some great ideas here for preparing for a mortgage. I didn’t know that the bank wants you to pay at least 20% of the home’s value for a down payment, that could be expensive! It makes sense to start saving for that early, a little at a time.