Going through the process of getting approved for a mortgage loan can be intimidating, but there are a few things you can do to make sure the whole process goes as smoothly as possible.
1. Familiarize Yourself with the Mortgage Process
Do some online research, or even buy a book that lays out the mortgage process in a simple, user-friendly manner. The more you know what to expect and the reality of mortgage qualification, the less likely you are to make an amateur’s mistake.
2. Obtain and Review Your Credit Report
Under federal law, you are entitled to a free copy of your credit report from each of the reporting agencies–Equifax, TransUnion, and Experian–once each year. To download your free copy, go toÊhttps://www.annualcreditreport.com/cra/index.jsp.
3. Address Any Inaccuracies
If your credit report is incorrect in any way–even if it lists an old address where you never lived or a job you never held–write to the credit bureau immediately and ask that this information be corrected. False information on your report could be a sign of identity theft, which could wreak havoc on your mortgage loan plans.
4. Pay Down Debt
If your income-debt ratio is over 20 percent, pay down as much of your debt as you can. The lower your debt load, the easier it will be for you to find a lender.
5. Get Pre-Approved
Mortgage qualification, or prequalification, is an informal process that doesn’t guarantee you will be eligible for a loan when you actually want one. Instead of getting pre-qualified, go through the entire process and get pre-approved. Once you are pre-approved, you will have a letter telling real estate agents that you have been pre-approved for a mortgage in a certain amount. The letter is usually good for 90 days.
6. Choose Your Home Cautiously
Your lender will insist upon a pre-inspection before they lend you the money to buy a home. Listen to the inspector and take his or her observations to heart.
7. Shop Around for the Best Deal
Before you select a certain lender, check around into FHA loans as well as loans from private banks. Get the best deal you can as far as interest rate and other terms of repayment.
8. Honesty is the Best Policy
When you’re shopping for that perfect loan, it may be tempting to bump your income up a little bit or to downplay your expenses. Don’t do it. If the lender finds out you’ve been less than honest, it can kill the entire deal.
9. Avoid Making Major Changes Prior to Approval
The time frame when you’re applying to get a mortgage loan is not a wise time to leave your current job, buy a new vehicle, or take out one or more new lines of credit. If your lender realizes that your life circumstances have changed significantly, he or she can back out, leaving you scrambling to find another source for a loan.
10. Show Up for Closing
When the day finally comes for you to close on your house, make sure you are there on time. Be prepared to provide picture identification and bring a cashier’s check to cover any money due at the time of signing.
Getting a new home loan is always a little stressful, but if you follow these ten steps, the process should go as smoothly and easily as possible.