While there are several things in life you can do over if you don’t succeed the first time, such as taking your driver’s test or snapping the perfect selfie, a mortgage is something that’s better done right the first time. Wyndham Capital Mortgage wants to impart a few professional and handy tips for how to get a mortgage and do so the first time you apply.
Check the Health of Your Credit
Before you do anything, pull your credit score and get a copy of your credit report. You might be shocked to learn how many hopeful homeowners neglect to examine their credit score and report. Doing so helps you gauge how likely you are to be approved for a loan. Both unknown credit card fraud/identity theft and a low credit score can see your application stamped with a giant DENIED. Once you know what your credit score is and that your credit history is free of mistakes, do everything possible to both retain and boost your credit in the years, months, weeks and days leading up to applying for a mortgage.
Keep Your Current Job/Position
If you’re currently employed, make sure you stay that way while seeking mortgage approval. If you’re quitting one job to start another or for a promotion, check with your lending agent to see whether you should put off the transition until after you’ve submitted your loan application. The reason it’s so essential that you have a job while seeking a mortgage is that lenders like to know you have a steady stream of income in order that you can easily make your loan payments. Having to reevaluate your loan application after your income changes takes time, and in that time you may very well lose that home you’ve got your eyes on.
Save Like There’s No Tomorrow
There’s a lot of saving involved with applying for a loan, possibly more than you realize. Not only do you have to save up for your down payment, you also have to consider closing costs and the fact that you’ll still need savings for other emergencies even after you’re approved for a loan. In regards to the down payment, try to save up more than the regularly required 20 percent in order that you don’t have to borrow as much, which means you can reduce the length of your loan. For closing costs, you can expect to pay anywhere from three to five percent of your mortgage balance, but it’s best to save up more just in case.
Rein in Your Debt
One thing that’s sure to make saving money easier is paying down as much of your debt as possible. Not only is it easier to save when you have less debt to pay off, it looks better to lenders. While you’re paying down your debts, make sure you aren’t unraveling your efforts by accruing more debt before you apply for a mortgage. Account for every penny you earn and every penny you spend, no matter how small or seemingly minor the expense. It’s easy to fall into the habit of buying coffee, going out to eat, paying for internet that’s faster than you need and other simple spending habits that can add up more than you realize. Applying for a mortgage is a great time to reevaluate your relationship with money and make necessary changes. Even the smallest of alterations can have the biggest impact and result in the largest of savings in the long run.
As you can see, there’s a lot of planning, saving and strategizing involved with applying for a mortgage. Take your time, consult with professionals when you feel overwhelmed and keep your eyes on the prize to make the experience easier on your peace of mind. Lastly, do not be afraid to ask for guidance and help!