So you’ve performed all of your credit checks and you’ve decided that it is finally time to buy that home that you’ve been dreaming of for years! This is an exciting time in everyone’s life. Unfortunately, with that excitement comes a lot of stress, especially when preparing for a mortgage application.
Luckily, we’ve got all the information you need. Here are some of the top ways that you can prepare for a mortgage application ahead of time.
Check your credit report before you apply for a loan. If you want to be able to prove to a lender that you are creditworthy, you’ll want to keep an eye on your credit to make sure that all of the information on there is as accurate as it can possibly be. Your score should ideally be above 700 and nobody else should have access to your credit.
First, start by making a dispute with credit bureau if you find any inaccurate information on your credit report. False information is one of the biggest culprits when it comes to bad credit. This is especially true is you have accounts that are open and don’t belong to you. These accounts could potentially be fraudulent. If you have a debt-to-credit ratio that is really high, you’ll want to get rid of some of that debt to increase your score. One of the best ways to help increase your credit score is to utilize seasoned tradelines.
Research is the dirty work when it comes to getting the best loan. No one likes it, though it can reward you better than anything else in the long run. A home is a massive financial commitment. You’ll want to make sure that you find the best lender or broker before applying so that you get the best rates possible. That hard work in researching could pay off in thousands of dollars down the line.
While you may have been dreaming about the two story home with ocean-front views and a white picket fence, you need to be realistic. That home may require you to make a 15% down payment, in which you only truly have about 5% of. If you can’t make the down payment comfortably, you shouldn’t be purchasing that home. Keep your options open and look for the best rates possible.
Determining the best type of financing for your home is extremely important. Do you want a 15-year mortgage or a 30-year mortgage? Are you looking for a mortgage that is a fixed-rate or adjustable? For those who believe mortgage rates may fluctuate, an adjustable-rate mortgage might allow you better flexibility. For those looking for complete security in the possibility that mortgage rates will increase, a fixed-rate might be the best option.
Home ownership may not be in the cards for you right now and that is okay. Make sure that you have your finances in order and that you are comfortable and assured when putting money down on a home. This is a big step in your life and you’ll want to make every decision with care to make sure you are getting the best deal in the end.