Getting approved for a mortgage isn????????t as simple as getting approved for most other loans. While getting approved for a car loan will take a few days, getting approved for a home can take weeks.
Not only will the approval process take more time, but there????????s also a higher chance of being denied. Here are a few tips to help make sure you????????ll get approved for the perfect mortgage.
Figure out your credit score
Knowing your credit score will help you know what you can qualify for. Figuring out your credit score will only take a few minutes and can be done online for free.
Most mortgage companies require at least a score of 680. If your score falls below this, you may have to resort to a nonconventional mortgage loan which will end up costing your more in the long run. If you know your credit score is below 680, you may want to wait before applying for a loan.
To get a higher credit score, pay all of your bills on time. Try to pay on outstanding debt and check your score frequently. Identity theft can permanently damage your score, so make sure to be vigilant.
Save a down payment
While there are many resources out there for families that don????????t have a down payment saved up, it????????s best to avoid a second mortgage for the initial costs. Instead, save up a down payment.
Down payments vary, but expect to pay at least 3.5% down. A higher down payment will not only save you money in interest rates, but it will ensure your lender that you will pay future payments in full. This extra insurance will almost guarantee you the perfect mortgage loan.
Though a down payment will be needed, you also need to save money for closing costs, appraisals, application fees, inspections, and so on. Keep this in mind when deciding how much you can put down.
Figure out what you can afford
While many mortgage companies will pre-approve you for loans that exceed your budget, sit down and decide what you can really afford. Create a budget with your spouse that you both agree on before accepting any loan.
Knowing what you can afford before you even start looking at houses will save you heartache. There????????s nothing worse than falling in love with a home that you just cannot afford. Instead, be realistic. Find a home that fits your budget and a loan that matches your expectations.
Don????????t give up
If you get denied the first time you apply for a mortgage, don????????t get discouraged. Instead, clean up your credit report and manage your finances a little more tightly. Once your finances are in order, apply again. Chances are that you will get approved with no complications if you make some adjustments.
To find out what you can get approved for, get pre-approved at the Longhurst Group today.