No matter how much some of us may not want to settle down and finally buy real estate, eventually the bug will probably get us. We are all told that it’s good to invest in home ownership versus renting but mortgages can be scary. The thought of owing money for a good chunk of your life can be daunting but when you are well positioned for a mortgage loan, things will seem a little less overwhelming.
When applying for any kind of loan you need to remember a few things. Your credit rating, debt versus income ratio and employment status are very important. With mortgage loans a few more things come into play like down payments, documentation and what you can and can’t afford.
Your credit rating is very important when applying to any loan. The lower it is the less likely you will be approved for a loan. With mortgages it is no different. Keeping your credit score at a decent number is a key factor in getting approved for a lower interest mortgage. There is no reason to despair if, for some reason, your score took a hit due to circumstances out of your realm of control. As long as you are honest with your loan officer your mortgage application should go smoothly. If you are struggling with your credit score your loan officer can provide you ways to boost your credit score quickly.
Your debt versus income ratio and your employment status are also factors that can make or break a mortgage application. It’ll be hard to be approved for a mortgage if you are already in a lot of debt. Also, you will have to prove that you are able to make your mortgage payments on your current salary. Lenders want to make sure you can pay all your bills. Remember, banks want to approve you for a mortgage but only if you can prove that you can pay them back with minimal drama. With large loans like mortgages the bank can foreclose on the very property you received the mortgage for to make sure they get their money back.
In these post-housing bubble days, documentation has become vital in securing mortgage loans. Now you will need precise paperwork for loan officers to check your financial status. To make sure lenders are getting their money back, they want to know a lot about the people they are lending to. It is, of course, possible to be approved for a mortgage loan with little paper work but in order to position yourself for a successful mortgage application it’s better to be ready by providing lenders the exact information they’ll need to secure you a loan.
Other things you should consider are the down payment and what you can and can’t afford. The higher the down payment you make the better because that you will be paying less interest and your payments will be smaller. There is no tell-tale rule though. You are not obliged to put down 20% on a mortgage loan which has become a myth in the mortgage biz. Usually you can put down way less than that and still get a comfortable interest rate. Keeping in mind what you can afford to pay is important. Don’t get stuck with a down payment or monthly payments you can’t afford.
Keeping these things in mind will help you get prepared for an appointment with a mortgage loan officer and hopefully will make the whole process a comfortable one.