Are You Ready To Apply For A Mortgage?

Getting a mortgage can be an exciting yet stressful process. Having your financial house in order is key in simplifying the process. Important steps in the preparation phase include; obtaining copies of your credit report, building a solid employment history, budgeting your finances and saving money.

First you will need to get a copy of your personal credit report from each of the three major reporting agencies; Transunion, Equifax and Experian. Check your file thoroughly for any discrepancies and errors. If there any accounts that are inaccurate you can dispute them and this must be done with each of the three agencies separately. Find out where you stand with your Fico score. You want your score to be as high as possible. Delinquencies and late payments accounts have a negative effect on your score. You might want to pay off a few of your existing loans and debt as your debt-to income ratio is factor which determines the type and amount of loan that you will be able to get.

Employment wise, you will want to work for the same employer for at least two years. Lenders also prefer to see at least two years of employment within the same field and career because it shows stability. Lenders will ask for your employment pay check stubs and bank statements in order to verify income. If you are in business for yourself you will need to provide documentation of your income with at least two years of W-2 documents and possibly proof of other assets and business profit and loss statements.

Find out how much house you can actually afford. Keep in mind that you will also need to pay property taxes, utilities, homeowners insurance, maintenance costs and possibly private mortgage insurance (PMI). Work out a budget and figure out how much home you can afford. It’s always a good idea to purchase a home that you can easily afford instead of getting a more expensive home that will be a struggle for you to pay off.

Remember not to take out any large loans and make any large purchases in the months leading up to your mortgage application. That includes auto loans and student loans, either for yourself or your dependents. This will increase your debt-to-income ratio and you will have less funds available to apply towards your down payment and closing costs.

It’s always a good idea to be prepared for any situation and the same applies to the home buying process. Being ready brings you that much closer to your first home.

Written by Jacqueline Star: Refinance, San Diego New Homes