5 Things to Know Before Applying for a Home Loan
Whether you’re a first-time homebuyer or an experienced buyer, there are some important things to keep in mind to ensure that your home mortgage process goes smoothly. Here are five things you need to know before applying for a mortgage!
Pay Your Bills on Time…Every Time!
A good credit history is vital when applying for a home loan. One of the best ways to have good credit is by consistently paying all your bills on time. Late payments negatively affect your credit score, and that can determine whether you’re approved for financing for a home loan. Even after your mortgage closes, it’s still important to pay your bills on time, as this could affect your ability to apply for future loans.
Postpone Opening New Accounts
If you’re looking for a new home, there’s a good chance you’re going to be looking to furnish and decorate it as well. This is especially true for renters or for buyers that are scaling up to a bigger home. While that big furniture sale next weekend might be tempting, it’s 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 one already in process.
Hold Off on Closing Existing Accounts
The same idea applies to existing credit accounts. While you should hold off on opening a new line of credit or account, you should also avoid closing any existing accounts. Each item on your credit report contributes to your credit history. The longer your credit history, especially with a good payment record, the better.
Find Out 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. Also evaluate what you are comfortable paying each month for your mortgage. You may have costs in your monthly budget that affect your bottom line, such as childcare, car payments or student loans. Just make sure you can find a mortgage that comfortably fits your budget.
Research the Right Lender
A common homebuying myth is that a buyer must use the same lender that they used to get pre-approved. Buyers have the power to shop around and compare quotes from different lenders. Put in the extra effort to locate an experienced lender who can offer you a range of solutions and walk you through your life-changing purchase.
If you’re thinking about buying a house, call one of our experienced loan officers today! We’re committed to showing you the way home.
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