5 Things to Know Before Applying for a Mortgage
Whether you are a first-time homebuyer or an experienced buyer, there are some important things to know first to ensure that your home buying process is smooth and simple. Here are five important tips to keep in mind on your homebuying journey!
Be Timely with Paying Bills
When applying for a home loan, it is important you have a good credit history which includes paying all your bills on time. Late payments can negatively impact your credit score, and that can play a part in whether you are approved for financing in addition to impacting the rate and term you may receive.
Avoid Opening New Credit Accounts or Closing Existing Ones
It is best to put off opening any new credit accounts or lines of credit until your loan is closed. Each loan is comprised of different terms and conditions and taking on more debt could impact the loan you receive or change the one already in process.
It is also important not to close any existing accounts even if they have a $0 balance. Each item on your credit report contributes to your credit history or the record of your responsible repayment of debts. The longer your credit history, especially with a good payment record, the better.
Hold Off on Making a Career Change
An abrupt job change can affect your loan approval. From your lender’s perspective, your employment history and income are paramount to your ability to make your payments. After all, you need to show that you have the stability and continuity of income to repay the loan. Even once your loan has been approved, be cautious about changing employment. Many lenders will do a final check to verify your employment and income has not changed since your final loan approval was issued.
Research What You Can Afford
Once you have committed to the decision of buying a home, your first step is to get pre-approved by a lender. Keep in mind that pre-approval is different than prequalification. Getting prequalified gives you an idea of how much you can afford, while pre-approval takes an in-depth look at your credit report and ability to purchase a home. This will save you time in the long run because you will only look at houses within your price range.
Find the Right Lender for You
Just as it is important to research all your loan options, it’s also important to find the right mortgage company for you. Put in the extra effort to locate an experienced lender who can offer you a range of solutions and guide you through your major life-changing purchase.
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