Finding your dream house might be exciting, but securing a mortgage can be a real headache. Funding your house will expect a good deal of patience and paperwork. Being prepared before applying for your mortgage will help make the process smoother. Both you and your lender will enjoy your effort.
Check Your Score
Do not get caught off guard by a lender who’s first to pull your credit rating. Check your credit rating so that you understand exactly what score you’re working with. This will tell you whether your credit needs work before you apply for a mortgageloan. You may get your score online from myfico.com.
Review Complete Credit Report
Request a copy of your credit report from all 3 credit bureaus: Equifax, Experian and TransUnion. You’re entitled to at least one free report each year from each bureau. Always assess each report for accuracy.
Dispute Inaccurate Information
Dispute any adverse information that’s incorrect. This can be carried out conveniently online at each bureau’s website or by email. The credit bureau must verify or eliminate information you question within 30 days. Keep records of your communication with the credit reporting agencies in this procedure.
Reduce the accounts on credit cards. This might help free up charge and credit variables into your credit usage portion of your credit score. It can help improve your credit score and looks great to lender. Reducing debt can also increase the amount you can borrow for a loan.
Pay Off Collections
Lenders generally require set accounts to be repaid. If you have any set accounts on your own credit report, contact each one and attempt to repay the debt. Try supplying a low-ball figure — maybe 30 percent — and begin negotiations to a pay off sum you can agree to. Ask a letter confirming any set accounts you pay.
Gather Income Documentation
Your lender will need to verify your earnings. Collect pay stubs, prior year tax forms, work contracts and some other documentation which supports just how much you make.
You will need cash for a down payment. Preserve this before you apply for your mortgageloan. The precise number will depend on the type of loan that you qualify for and the amount you borrow.
Do The Math
Review your finances and create a budget. Make sure buying a home makes financial sense for you and your family. In some instances, people can be better off leasing. If buying a house makes financial sense, then decide just how much you’re comfortable paying for a house.
Research interest rates and lenders. Ask friends or family members about their experience with lenders. Decide on a lender and be sure they manage the loan type you want, such as FHA or VA loans.
It is a great idea to receive pre-approved or pre-qualified for a mortgage before you really shop around or are prepared to apply for a loan. The procedure is fast and provides you with a realistic picture of just how much you are able. Real estate agents will also wish to learn if you’ve been pre-approved; having finished this step shows them you’re serious.