It can be an uphill battle to qualify for a mortgage. Yet there are certain steps that you can take that make the process a little easier. The more organized you are, the less hassle applying for a mortgage will be.
Requesting Your Credit Report
Getting a mortgage becomes even more difficult if there are negative marks on your credit report. The first step is to order a copy of it and read it thoroughly. Any mistakes should be cleared up long before starting the application process.
Improving Your Credit Score
The higher your credit score is, the more likely you are to qualify for an affordable mortgage. If your credit is not already good to excellent, it is smart to raise it before applying. Lenders are always hesitant to extend a mortgage to someone who doesn't have a good track record when it comes to paying their bills.
Having a significant amount of money in your savings shows lenders you are responsible when it comes to finances. Applicants with little in savings are not desirable candidates for a mortgage. Ideally, you should have at least enough money in the bank to cover two to three months' worth of mortgage payments. In some cases, the amount of money you have in the bank outweighs a mediocre credit score or history.
Researching Mortgage Types
There are different types of mortgages you can apply for, and some are easier to get than others. If you have good credit and a decent amount of money for a down payment, conventional loans usually cost less than the alternatives. First-time buyers will often qualify for deals others don't qualify for. When you are buying your first home, HUD is one popular option, and in some cases, you may even be able to get a grant to make your down payment with.
Getting More Than One Loan Quote
Mortgage companies always compete with each other to get your business. Even if you have chosen the company you want to apply for a mortgage with, you can often get a better deal if you get quotes from several different lenders. This can be an effective way to negotiate to get the best possible deal. Experts recommend getting three to four quotes and comparing them before making your decision.
Getting a Preapproval First
It is always a good idea to go through the preapproval process before filing any applications. This will give you insight into the amount you will qualify for when it comes to your mortgage. When you start looking at houses, you will know what you can afford, so you avoid seeing houses that are not within your monetary range.
Getting Your Financial Files Organized
The application process for a mortgage requires files and paperwork to be submitted. Organizing bank statements, proof of income and other relevant documents will make the rest of your journey to homeownership much smoother.