For many people, buying a home is one of the biggest investments that they make. But with current home prices most people cannot afford to pay for a house upfront, so a mortgage loan is necessary to complete the purchase. If you're a first-time home buyer and have never gone through the mortgage process before, use the following tips:
Pay Attention to Your Credit Report
Before you even think about applying for a mortgage, it is very important to take a look at your credit report. The information contained in your credit report, along with your credit score, will play a huge part in whether you will qualify for a mortgage loan. In addition, your credit report and score will also play a part in what interest rate you will be offered. It is a good idea to begin paying down debt several months in advance of when you plan to apply for a mortgage in order to leave time for your credit report to update.
Consider Working with a Mortgage Broker
There are numerous mortgage lenders, and each lender offers their own loan terms. It can be time-consuming and difficult to find the best mortgage lender by yourself-- a mortgage broker can be a valuable resource for anyone shopping for a mortgage loan. A mortgage broker does not work for a certain bank or lending institution. Instead, he or she has the ability to work with many banks and lenders in order to find the mortgage with the best interest rates and terms for your personal situation.
Applying for a mortgage can be a long process that involves providing many documents. Mortgage lenders want a full picture of your current financial situation, so they will likely request copies of tax returns, bank statements, paycheck stubs, and proof of any other assets that you may hold. In order to expedite the mortgage process, it is a good idea to begin collecting and gathering this information as soon as you fill out a mortgage loan application.
Make Sure You are Pre-Approved for a Mortgage
Before you begin looking at homes, it is best to be pre-approved for a mortgage so you know exactly how much you can afford to spend on a house. The term pre-approved is often confused with pre-qualified, but they are actually not the same thing. Pre-qualified means that a lender has given you a ball-park figure of what they're willing to lend based on your income to debt ration, but being pre-approved for a mortgage means that a lender has processed all of your paperwork and has offered a specific loan amount as well as interest rate.
For further assistance, contact a local provider, such as CU Mortgage Service.