Thinking about buying, selling or refinancing a home? Get Prepared for a Home Mortgage Loan, it is a good idea to prepare for the upcoming mortgage loan before walking into the bank and asking for approval. Taking out a mortgage loan can be one of the most important parts of the home buying process.
See these tips to prepare, and get approved for a mortgage on the new home you want.
1. Check your credit report and dispute any errors
Before you plan to get a mortgage, check your credit report for any issues. make sure that there are no recent delinquencies or collection notices on the account. If such problems were recently resolved, wait several months before applying for a mortgage.
If your credit report contains errors—for instance, there’s an unpaid item that you’ve actually paid or an account showing up that isn’t yours—you’ll want to file a dispute with the credit reporting agency.
This step should really be completed several months before a person is ready to apply for a mortgage. Making sure your credit history is accurate should be an essential part of preparing for getting a mortgage.
2. Show income and assets
Lenders will make sure that the person is going to be able to pay the loan back in full. For their own reassurance, the lending officer will typically examine two main areas. The first will be the monthly income of the potential borrower. Those interested in taking out a loan should avoid job hopping in the months leading up to the loan application process. Holding down a job for several months, and preferably several years, before applying will give the lending institution a good idea of how much money a person has that can potentially go towards repaying the loan.
The lending institution will want to see that the borrower has assets that can help back up the loan. The assets in the bank should be established. Getting your financial house in order is a key part in preparing to get a mortgage.
3. Exclude other debt
Banks often want to avoid having the debt of a particular person surpass a certain percentage of their monthly income. This means that they will be closely scrutinizing any other debt, such as credit card debt, car loans, etc. If at all possible, pay off all credit cards and as much of other types of debt as possible to minimize the monthly debt payments.
Preparing for getting a mortgage is something all home buyers should do!