Tips to Help You Qualify for a Mortgage Loan
Posted on: 16 March 2022
Buying a home is a process that entails several steps from finding the right realtor to applying for a mortgage and submitting an offer on the home you want. For your purchase to ultimately be successful, you need to apply for a mortgage loan and close on the purchase within the right period of time. The following provides you with some information about your upcoming mortgage application process.
Repair Your Credit
As a home buyer and credit consumer, it is important that you know what is showing on your credit file. If you have not requested a copy of your credit file for review, then you should definitely do so now before you apply for a mortgage. Your credit file is available for you to view for free once a year in order to check for discrepancies and to evaluate your credit score. This opportunity will give you time to review it for errors so you can dispute them and have them removed from your report. If you apply for a mortgage with errors on your report, such as a negative payment history or a past due account, it can prevent you from getting your mortgage loan approved.
Take this time before you apply to improve your credit in addition to correcting errors. Evaluate how much debt you have, especially credit card debt that is unsecured. Credit card debt can adversely affect your debt-to-income ratio, which can put you in a position of potential debt that decreases your credit score. Pay down credit card debt or consolidate them into an installment loan or personal loan. The more you can pay down your debt, the better your debt-to-income will be and will better improve your chances to get a great loan program.
Evaluate Your Down Payment Criteria
In addition to preparing your credit for the mortgage application, consider how much you can pay towards a down payment. The down payment is going to affect how much you ultimately need to borrow for a mortgage and also helps your chances at a better mortgage rate and terms.
When you put a larger down payment, it will reduce the mortgage's loan-to-value ratio, which puts you in a better position with the loan. You can avoid paying mortgage insurance with a larger down payment and will also secure a strong position as a buyer when the mortgage bank evaluates your application. Talk to your lender about different loan programs and their down payment requirements to see what options are available.
To find out more, contact a mortgage service such as Fairway PNW.
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