If you’re in the market for buying a house, you’re going to need a mortgage. A mortgage is probably the biggest financial commitment you’ll ever make, so it’s important to find the best deal possible.
But how do you do that? With these tips, you’ll be well on your way.
Know (and Improve) Your Credit Score
Before getting started with the mortgage process, get a copy of your credit report. This will give you insight into what lenders will be looking at when you apply for your mortgage.
If there is anything on there that is not accurate, make sure you get those cleared up. Also, close any old credit cards that you are no longer using.
Know How Much You Can Afford
Sit down and create a budget so you know exactly how much you can afford in a monthly payment. This is a huge step that most people do not do. A Lender will approve you for a certain amount, but that amount may be more than you can actually afford.
Remember, mortgage payments include principal and interest PLUS taxes and insurance.
Don’t Quit Your Job
You will want to stay in the same jobs while you move through the mortgage process. Lenders want to see that you’ve been with an employer for a little bit at least. Hang on to your job until after your closing.
Pay Off Debts
It’s really helpful to pay off as many debts as possible. This will not only free up your monthly budget for a higher mortgage payment but will also show the lenders that you have less debt and aren’t as much of a liability. The goal is to prove to the lender that you manage your money responsibly so they know they will get their money every month.
Pull Together Proof of Income
Lenders will require proof of how much you earn, so you’ll need to provide them at least 3 months of pay stubs or bank account information (if you are self-employed). Have this information handy when you start the process.
Make a Large Down Payment
The bigger the better! The bigger the down payment you make, the smaller your mortgage (and payments) will be. Also, you may get a bigger selection of mortgage products to choose from along with better interest rates.
Getting a mortgage can be overwhelming, but with a little work, you’ll be able to land the best mortgage at the best rate.