How To Prepare For Your First Mortgage
Go to: Previous Article Next Article
It's less daunting to apply for a mortgage if you are fully prepared and know what to expect in advance. Applying for a home loan can be a time consuming endeavor and having everything in order can help to simplify a complicated process. Important steps in the preparation phase include; reviewing your credit reports for inaccuracies, building a solid employment history, making a personal financial plan 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.
Calculate how much you can afford to borrow. Keep in mind that you will also need to pay property taxes, utilities, homeowners insurance, maintenance costs and possibly private mortgage insurance (PMI), not to mention your other expenses. Write out a plan and figure out how much home you can afford. It's a smart idea to downsize and purchase a home that you can easily afford instead of getting a more expensive home that you'll be struggling to pay off.
It is vital not to take out any large loans, such as an auto loan for example, in the months leading up to your mortgage application. This will increase your debt-to-income ratio and you will have less funds available to apply towards your down payment and closing costs.
Taking these steps will increase the chances that you will be able to qualify for the home of your dreams.
Article Source: Articlelogy.com
- Credit Cards A big selection of Cards in all flavors: Bad Credit Cards, Secured Cards, Prepaid Cards, Canada Cards, Low Interest Cards -
Word Count: 440
Reduce Your Debts Without Bankruptcy. See How Much You Can Save. Free Debt Analysis
