Home Mortgage Tips That Can Save You A Bundle

Buying a home is a great time in anyone’s life, but getting to that point for most people requires a home mortgage. This is where things can get complicated and delay the process of you actually purchasing your dream home. Don’t wait until it is too late, get started now by reading the following article that shows what is needed to get approved for a home mortgage.

Have at least 20 percent of the purchase price saved. Lenders will want to verify that you have not borrowed the money, so it is important that you save the money and show deposits into your checking or savings account. Down payments cannot be borrowed; thus it is important to show a paper trail of deposits.

Watch out for banks offering a “no-cost” mortgage loan. There is really no such thing as “no-cost”. The closing costs with “no-cost” mortgages is rolled into the mortgage loan instead of being due upfront. This means that you will be paying interest on the closing costs.

A solid work history is helpful. The majority of lenders want to see no less than two years’ worth of stable employment to grant approval. If you switch jobs often, this can be a red flag. Additionally, you should never quit your job during the application process.

Prepare your paperwork before applying for a mortgage. There are many items that a lender will require. These items include the last two or three years’ worth of tax returns, copies of each of your monthly credit card statements, and installment loans. Three months’ bank statements and two months’ worth of pay stubs are also needed for approval.

Obtain a credit report. It is important to understand your credit rating before you begin any financial undertaking. Order reports from all 3 of the major credit reporting agencies. Compare them and look for any erroneous information that may appear. Once you have a good understanding of your ratings, you will know what to expect from lenders.

Make sure you pay down any debts and avoid new ones while in the process of getting approved for a mortgage loan. Before a lender approves you for a mortgage, they evaluate your debt to income ratio. If your debt ratio is too high, the lender can offer you a lower mortgage or deny you a loan.

Don’t use real estate brokers or mortgage lenders who encourage you to lie on your home mortgage application. It is illegal to lie on this application, and it is a legal document. Misrepresenting your income or other information is grounds for criminal prosecution. Working with people who encourage you to commit a crime is not a good idea.

Be honest when it comes to reporting your financials to a potential lender. Chances are the truth will come out during their vetting process anyway, so it’s not worth wasting the time. And if your mortgage does go through anyway, you’ll be stuck with a home you really can’t afford. It’s a lose/lose either way.

Pay your mortgage down faster to free up money for the future. Pay a little extra each month when you have some extra savings. When you pay the extra each month, make sure to let the bank know the over-payment is for the principal. You do not want them to put it towards the interest.

Start to develop a great relationship with a lender. It may be a good idea to take out a small loan for furniture or something, and pay it back before applying for the mortgage. This helps them see you as a good credit risk before you apply for your mortgage.

Never choose a home mortgage from a company that asks you to do unscrupulous things. If a rep is asking you to claim more than you make to secure the mortgage, it’s not a good sign that your mortgage is in good hands. Walk away from these deals as quickly as you can.

One item of documentation for a home mortgage application that is often overlooked is a gift letter. If your relatives have chipped in to help you make your down payment, you may need to document your source of income. This really depends on the type of home mortgage you get. Some require this, and others do not. Play it safe by getting a gift letter from anyone who gives you money to help you buy your home. Have this on file with your other documentation.

Do not forget to consider the miscellaneous fees that come with a home mortgage in its final cost. You will definitely find that each company has its own rates and that some can use these fees to greatly increase what they make on the final deal. Keep this in mind as you shop for a good home mortgage.

Never hide from your debt. It does not feel good to not be able to pay your bills. Do not let that keep you silent. Your mortgage holder, and other creditors, will work with you if you tell them what is going on with your finances. Silence can result in judgments against you.

Save as much money as possible before trying to get a home mortgage. Necessary down payments vary by lender and the type of loan, but you should have 3.5% down. The more you have the better. If your down payment is less than twenty percent, you’ll need to pay for private mortgage insurance.

Never sign a loan when you are unsure of certain pieces of language in the terms sheet. Get the answers you need asap. If the lender is using unclear or confusing language, it could be a sign that it is hiding terms that they’d rather you not know. Be 100% secure in what you are signing.

So many people rush into the home buying process without preparing the financial situation properly in order to get approved for a home mortgage. This can unfortunately delay the process if you get denied. Then you are left wondering what you need to do to get approved. Thankfully the tips presented here should get you prepared for what is needed to get that dream home of yours.

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