If you have finally decided that you want to buy a home then it is time to get ready for the mortgage application process…
If you have finally decided that you want to buy a home then it is time to get ready for the mortgage application process. Just a few short years ago about all you needed to get a mortgage was the ability to fog a mirror. But now, the lenders are going to require plenty of paperwork so they get a warm fuzzy feeling about you.
The First Step Isn’t Finding Your Dream Home!
Instead it is seeing what type of mortgage you qualify for, how much down payment / closing costs you must have and determining the maximum price you should spend. Please remember that just because the bank will approve you for a certain amount doesn’t mean you have to spend that much. Instead I suggest setting your maximum price by talking to your lender about a monthly payment that you will be comfortable with.
Like I said earlier, part of getting a mortgage is submitting copies of your financial paperwork. To save yourself time and prevent any headaches, if you gather all of this stuff now it will make the application process a lot easier and less stressful.
This is so important that I am repeating it again. You must consider what you can really afford before you start looking at homes. By being realistic about setting your maximum price, you will avoid having a mortgage payment that is too large for your budget. Like I said, just because the bank approves you for a certain amount does NOT mean you have to spend that much.
I think back to when my wife and I bought our current house and I am so very glad we did not spend more than we did. There are times that having a lower house payment is such a blessing. Especially if an unexpected bill comes up. So even though buying a house at the upper end of your price range looks attractive, the truth is it isn’t the best idea for everyone. If it will be a struggle to make your mortgage payments then it will take much longer to pay down the mortgage.
You are going to have to look at your finances and be completely honest with yourself. If you buy a house that has a comfortable monthly payment, then you don’t have to worry about making the payment!
While there are ways to avoid some of the required cold hard cash you need to buy a home, the truth is that you are going to need money in the bank. It will be easier to save up if you start long before you decide to buy a home. Every month you can stick a little bit into a savings account. The bigger your down payment, the less your mortgage will be. Which means you will save more money in the long run.
Buying a home is probably going to be the biggest financial decision of your life. It never ceases to amaze me how many people start the home buying process before they have done any research. If you take the time to learn about the steps in getting a mortgage, it is going to save you money.
Something else I strongly recommend is getting impartial advice on the mortgage market from several different sources. By having more knowledge about mortgages, you will be better prepared to make informed decisions.
Before you apply for a mortgage, you should take a look at your credit to make sure it is squeaky clean. The lender is going to examine your credit report with a fine tooth comb. Sometimes it makes people think the banks want to say no. But the banks just want to make sure they are making a good business decision when they lend you the money to buy a house.
The banks look at your credit when they are deciding whether or not to approve you for a mortgage. And they also look at your credit to determine what interest rate to give you. So if there are any errors or issues with your credit report, it is a good idea to get them fixed before you apply.
These are just a few things to consider before applying for a mortgage. As always, I am providing this to you for informational purposes only! I am not a mortgage lender and you should contact the lender of your choice directly to learn more about its mortgage products and your eligibility for such products.