21 Mar The Do’s and Don’ts of Your Mortgage
Your Mortgage Process
Applying for your first mortgage can be really scary. Even applying for a new mortgage in general can be scary. There are many things that can influence your mortgage rate, and these things to always be changing. In this post we have put together a list of do’s and don’ts found from last year that can help make the mortgage process go smoothly.
Improve Your Credit Score
In almost every case, the higher your credit score, the cheaper your mortgage will be. So your credit score is something you want to have as high as you can. To improve your credit score, you can pay off your debt, pay your bills on time, and try to cut out using credit cards if possible.
Lower Your Debt-to-Income Ratio
When considering you for a mortgage loan, lenders will look at you debt-to-income ratio. This shows how much debt you have to pay of and how much you are able to pay per month by looking at your income. By looking at this, lenders can see how much house you can actually afford and how much they can give you. The two ways to lower your debt-to-income ratio are: lower your debt or raise your income. You can lower your debt by paying it off and stop spending money on non-essential purposes. You can raise your income by taking on more work hours or getting a second job. It is good to be aware of this before you go in to your lenders office.
Keep Good Records
Lenders like to see documents that show your employment, past/current debts, and income levels. This allows them to calculate your risk level and if its low enough to take you on. You can help smooth the process out if you have the documents they need ready and available. Documents they could want include: W2’s, paystubs, and tax documents. Depending on your lender, you might need more. Keeping good records allows you to have these documents available so you don’t need to scramble around to find them.
Make a Savings Plan
At this time in life when you’re applying for a mortgage to buy a home, it is a good idea to create a savings plan. This way you can know that you will have money every month for your mortgage. It is not a good idea to make major purchases, like buying a new car or boat. This not only uses a lot of money, but it can also lower your credit score.
Mortgages are confusing. Especially if you are new at it. Do not be afraid to ask you lenders questions. They want to make sure you understand this process and feel comfortable with all the decisions you make.
Work With Home Buying Professionals
Working with home buying professionals can make the stress in your mortgage process much lower than if you try and do everything yourself. These people include: home inspectors, loan officers, and real estate agents, along with others. They are there to answer questions and help you get to the goal you have as easily as possible.
Be Slow to Respond to Your Loan Team
Your loan team will most likely contact you throughout the process sending you updates and to get more information from you. Be sure to get back to them with information as soon as possible. This will allow your loan to be closed on time and causes the process to move more smoothly for everyone.
Open or Close Credit Lines
Before you begin your mortgage process it is good to know what your credit looks like. There are places that can show you what your credit score is and you can request a free credit report from one of the three federal credit reporting bureaus. You should avoid opening new lines of credit or closing credit lines because this can cause discrepancies in your credit score.
Go Shopping Without Knowing What You Can Afford
Getting preapproved for a mortgage loan is a good idea to help you know how much house you can afford. After knowing that then you can go look for homes in your price range. Doing this helps you not fall in love with a home then find out that it is not in your price range. Also, getting preapproved helps you to make a more competitive offer on the home with a preapproval letter since you have already verified your income and assets.
Make Major Life Changes
One of the worst things you can do during the mortgage process is make major life changes like quitting or getting a new job. Lenders look for someone whose life is steady, so keeping the same job is a good thing and can help the process go much smoother.
These a just some of the general things that can help you through the mortgage process. Here at Staples Mortgages, we want to make this process easy. Our staff is more than willing to answer questions and give you tips to help this be one of the best mortgage experiences you’ll have to go through. Come stop in and see us today!