Tips To Help You During The Mortgage Loan Process
The idea of buying a new home is an exciting prospect, but it is also one you need to take seriously as you prepare for your loan approval process. Work closely with your mortgage broker as you get ready to start the process to make sure you are as ready as possible for this new purchase. Here are some tips and recommendations for you to follow when you are preparing to apply for a home loan in your home purchase process.
Manage and Improve Your Credit
Your credit score and your report are a big part of your mortgage approval process and can actually have a big impact on how much you can borrow and how much you pay for the loan. The rate of interest on your mortgage will directly impact each mortgage payment, so the better you can improve your credit score before you lock in a mortgage loan rate, the better your financial outlook will be for the term of the mortgage loan.
You should keep your credit score protected by paying your payments on time. Additionally, you should try to pay down credit card balances as much as possible. The higher the credit card's balance-to-credit limit, the more it will lower your credit score. For example, if your credit line on a card is $5,000 and you owe $4,500, this high balance-to-credit limit will hurt your credit score more than if you paid it down to less than half or lower. So, if you can pay it down below $2,500 or less, it will help improve your credit score.
If you have paid off a credit card, don't close the account, especially if you are about to apply for your mortgage. You should also not apply for any new credit cards or loans, and don't make any large purchases with your credit just before you are ready to apply. For example, don't buy a new appliance on credit and don't put airline tickets on your credit card for a vacation this summer. These actions will adversely affect your ability to get your mortgage loan.
Save Up Some Funds
Although you may still be able to find zero down mortgage loans, they can be difficult to get and also will make your loan costs higher. For this reason, it is a good idea to save up some money for your home purchase and loan closing. Any extra funds you can put as a down payment will reduce your overall loan costs during the time of the mortgage. Additionally, having access to extra funds will help you at closing when you will need to pay for expenses such as mortgage fees, appraisal costs, and a professional home inspection.
For more information, contact a mortgage lender.