Looking Into A Mortgage?
4 Tips To Make It Easier
home selling articles and tips
If you are looking to get a mortgage to buy a new home, you may feel like there are many hoops to jump through in order to get approved. Before applying for a mortgage, consider these tips to make your mortgage application process easier.
Be Aware of Your Credit Score
With many websites out there today that allow you to search your credit score for free, there is no reason to be ignorant of your credit score. Once you find out what your credit score is, work to improve it. A stronger credit score will increase your chances of getting the mortgage for the home you want at the most attractive rate.
Ways you can increase your credit score include making payments on time, reduce your debt utilization (percentage of available credit you use). Also make sure not to close any old credit cards, as older cards increase the age of your credit history, which factors into your credit rating.
Save Cash To Maximize Your Down Payment
The more money you are able to put down to buy your home, the easier it will be to get a mortgage. While the minimum down payment you need for FHA loans is 3.5%, if you can put down 20%, you will be able to not only get a lower interest rate, you will not have to get private mortgage insurance (private mortgage insurance, or PMI, is attached by lenders to mortgages if the down payment is below 20%). Without the added PMI, your monthly mortgage payment will be lower.
Use A Mortgage Calculator
A mortgage calculator will show you how much your monthly payments will be based on the mortgage amount and interest rate. This will allow you to visualize how much home you can afford based upon your income. Mortgage lenders may try to steer you towards borrowing as much money as possible, but remember to take into account how much you can afford to make in mortgage payments every month. Many realtors, like Service First Realty, offer mortgage calculators and other tools online to help you on your way.
Reduce Other Personal Debts
Reducing your personal debts (such as credit card balances, student loans, and car loans), will improve your chances of getting the mortgage you want. Lenders take into account your personal debt-to-income ratio, so reducing your ratio will give you an edge when applying for a loan.
While these tips will improve your current situation, they will not guarantee you will be able to buy the home you want at the rate you want. Always remember you can always improve your financial situation over time, as long as you instill in yourself some financial discipline, make realistic goals, and consistently follow through on your plans.Home Selling Tools
