Even if this isn’t your first time applying for a home loan, the steps to the familiar dance might have changed since you were last on the floor. Wyndham Capital Mortgage is here to provide you with five tips for getting the most out of your mortgage experience and helping to make the application process as easy as possible.
5 Ways to Make the Most of Your Home Loan
1. Get Your Paperwork in Order
Preparation is absolutely key when it comes to financial decisions as monumental as a mortgage. Specific documents you’ll need while applying for a loan include:
- Your W-2 forms for the previous two years
- Recent paycheck stubs
- Either 1099 or profit and loss forms, if you’re a business owner
- Cancelled checks for rent or other mortgage payments
- A complete list of your assets
- Your most recent federal tax form
- A full list of the debts you owe
Just to be on the safe side, ask your loan officer if there’s anything else you’ll need. Be sure all of your documents are well-organized once you’ve gathered them all.
2. Get Pre-Approved
You might have heard that getting pre-qualified is good, but being pre-approved is better. The reason for this is pre-qualification is no guarantee a specific lender is willing to work with you, nor does it guarantee you a home loan. With pre-approval, the lender has looked over your documents and come up with a amount she or he is willing to lend you. Another great thing about getting pre-approved is it shows sellers you’re a viable buyer, which can go a long way in helping you become a successful homeowner.
3. Beef Up Your Down Payment
While it’s recommended you save roughly 20 percent of the purchase price of your future home for the down payment, don’t be afraid to save even more. The bigger your down payment, the less you have to borrow for your mortgage. To make this easier, consider having a portion of your paycheck regularly and automatically deposited into a special account for your down payment.
4. Set Your Terms
Before you apply for your loan, decide how much you’ll be able to devote every month for your payments. Doing so shows lenders you’re a responsible borrower, and it also helps set the foundation for your future budget. Do your absolute best not to go over your limit. In fact, try to stay under it, if possible. Even if you receive a mortgage offer you can easily afford, see if there’s any way to lower it. It never hurts to ask, and doing so might make your journey down the road to homeownership that much smoother.
5. Know Your Credit Score and Take Steps to Improve It
Don’t just think you have good credit, know you have good credit. Request a copy of your credit report and take a careful look over it to ensure all of the information is accurate. If you notice any discrepancies, inform the reporting agency immediately in order that they can be taken care of before you apply for your mortgage.
If you want to improve your credit score before applying for your loan, know that doing so often takes a while, so you may not have much time to add a few points to your score before you get a loan. That being said, some of the things you can do to improve your score include:
- Paying your bills on time
- Taking care of or reducing your outstanding debts
- Reporting errors on your credit score
- Paying your credit cards off in full every month when possible
- Not taking out new loans before applying for your mortgage
- Lowering your debt-to-income ratio
- Keeping your credit utilization ratio below 30 percent
And there you have it. It’s true that getting a mortgage is a major step in your life, but with the right information and lender, you’ll plant your feet on solid ground rather than sifting sand. Have more questions? Let us help you learn more about your next steps!