How To Better Prepare Yourself To Apply For A Home Mortgage
Posted on: 15 March 2017
If you are finally ready to purchase a home of your own, but you do not have enough money to pay cash for it, you will need to apply for a home mortgage. However, before you jump right into the application process, there are some things that you will want to do in order to improve your chances of being approved for a mortgage.
Start Saving For A Down Payment
This is the very first thing you need to decide to start doing, especially since it might take you a while to save up enough money to cover the down payment and the closing costs. Sure, there are some loan programs out there that may offer a no down payment option, but you may be stuck paying for a PMI, or private mortgage insurance. This is an insurance that you will continue to pay on every year until the equity of your new home hits the twenty percent mark. You could avoid paying that by putting down a large enough down payment. Sure, it is still money spent but with it being spent on the down payment for your house instead of private mortgage insurance, you will be getting more value for your money. The more money you put down the better, but you want to aim for at least twenty percent of the cost of the home.
Verify All Of The Information On Your Credit Reports
You could have great income and a suitable debt-to-income ratio, but if your credit score is too low, you may find it difficult for any quality mortgage companies to work with you. Therefore, while you are saving up for your down payment, you will want to request a copy from each one of the major credit reporting agencies. This is important because some creditors will only report to certain agencies instead of reporting to all of them. The goal is to make sure that there is not any incorrect information on your credit reports, as those mistakes could be driving down your score. The sooner you spot mistakes and report them for a review, the sooner the issues can be corrected and your credit score adjusted.
Once you taken care of those things, you will be ready to start looking for the home of your dreams. You might even want to go ahead and get pre-approved for a mortgage so you are well aware of how much you can afford to spend on a house.
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