Buying a home is a big deal. It’s also a significant investment, and for many, the biggest purchase they will ever make.
However, if you don’t have cash for this purchase (and most people don’t), you must learn how to get a mortgage loan. While the process may seem simple, this isn’t always the case.
In fact, there are several issues you may face along the way. Knowing what to do and how to get the best deal as you travel down the path to homeownership.
Ready to learn how to get a mortgage loan? If so, keep reading.
Check Your Credit
Any bank or credit union you go to, including Farmers Bank, will check your credit when you try to get a mortgage loan. It’s a good idea to know what they will find before you apply.
It only takes a few minutes to access your credit report. Unfortunately, there are far too many people who never review their score or credit history.
Your credit activity and score greatly impact how likely your mortgage application is to be approved. Many lenders require you have a minimum credit score of 680 or 620 for FHA loans.
Along with your score, creditors will look at things like frequent late payments, missed payments, and other negative cred information. You can also check for any errors on your credit report.
If you find mistakes or information that is incorrect, make sure to dispute it with the proper credit bureau.
Consider Having a Cosigner
Is your income too low for approval? If so, consider getting a cosigner.
This helps because their income is included in the affordability calculations. Cosigners can be anyone, even if they don’t live with you.
Qualities of a good cosigner for your mortgage loan include:
- Good credit history
- Stable income
- Good employment history
Sometimes, cosigners can compensate for low credit scores. Essentially, this person is providing the lender with a guarantee that the payments will be made.
Talk to a Mortgage Broker or Financial Advisor
Before sending in a mortgage application, make sure you understand your financial situation. A good way to fully understand what is going on with your finances is by meeting with a licensed mortgage broker or financial advisor.
These people can help you figure out how much of a loan you can realistically afford. They will also help you determine important things like down payment requirements and the type of mortgage that is best for your situation.
Consider Waiting to Buy
In some situations, conditions in the housing market, lending business, or economy make lenders unable or unwilling to approve many loans. In fact, banks are now scrutinized by the Federal Reserve Bank and regulators to ensure they aren’t taking on too much risk.
If the economy is not supportive of a healthy housing market now, you may need to wait until the economy improves.
While you wait, the interest rates or home prices may drop. This could be beneficial for you in the long run.
Pay Off Outstanding Debt
Do you have current debt? Before applying for a mortgage, it is smart to pay this off.
This will help ensure you can handle your new mortgage payment and give you the best chance of being approved for a loan.
Consider More Affordable Properties
If you cannot qualify for the mortgage you want and don’t want to wait to buy, consider a townhouse or condo rather than a single-family house. Usually, these options are more affordable.
You can also consider a smaller home with fewer bathrooms and bedrooms or a different neighborhood. All these options can help you save money.
If needed, you can even move to find a more affordable housing market.
Be Honest on Your Mortgage Application
Never lie on your mortgage application. It’s best to have at least 12 months of check stubs to verify your employment ready to go.
As mentioned above, it is also smart to pay off any type of small, revolving debt or long-term commitments you have.
While waiting to be approved, try to avoid taking on new debt unless absolutely essential. Also, provide your potential lender with the requested information quickly.
Ask the Lender What They Look For
You can get a head start on your mortgage application by asking a lender what criteria they consider when evaluating your mortgage loan.
This information can let you know if you should clean up your credit or repay debt. Even if you are self-employed, you may need to prove having a steady income before being approved.
Getting pre-approved for a mortgage is a smart move. This lets you know how much of a house you can afford. In the long run, this will also help you avoid overspending on a house or property that is out of your budget.
Most lenders provide pre-approval options. It’s a good idea to take advantage of this.
Now You Know How to Get a Mortgage Loan
If you are wondering how to get a mortgage loan, start with the tips and advice found above. This information will help you get started and provide you with a good foundation for getting approved for the mortgage you need.
Homeownership is a huge step. It all starts with getting the loan needed to make your purchase.
Are you searching for more helpful information? If so, be sure to check out some of the other blogs on our site. We update the content often to help keep you informed.
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