3 Key Factors in Qualifying for a Mortgage Loan
If you are tired of renting and have been thinking of becoming a first time home buyer, there are several tips that can prepare you for qualifying for a mortgage loan. The three most critical are:
Keeping score of your credit score
Most first time buyers are between 25-35 years old, so credit could be an issue if you were a bit rambunctious in your youth. In qualifying for a mortgage loan, most lenders that deal in the housing market look for a credit score around 640 or so. Before the recent housing crisis the acceptable credit score was lower, but because credit was part of the cause of the mortgage crisis, many banks and lenders have raised the score. They now not only look at if you can pay your bills, but if you have been paying all of your credit cards as well.
If you have a low score, talk to a financial consultant (or a mortgage consultant) about easy ways to up your score and improving your changes of qualifying for a mortgage loan.
How much debt can you handle?
Your debt threshold should also be taking in to consideration. Most lenders advise that keeping your debt at about 30 percent of your overall income is the right way to go if you are qualifying for a mortgage loan. Keep in mind your lifestyle and future needs and wants as well.
Paperwork, paperwork, paperwork
No one likes paperwork. But in the case of the mortgage process, it pays to be prepared. In qualifying a mortgage loan, you also must know what’s required by your lender. An application will have to be filled out first, providing things like your work history, address and previous addresses and your personal identification (social security) number. Your lender will also pull your credit history to check your score. (So be sure you’re at around 640). Other loan officers may ask for other documents, too. Usually the paperwork ask for is to verify your employment and current salary. You can expect to provide W2s in the mortgage process as well. So be prepared.
With these three tips in mind, qualifying for a first mortgage loan will be less stressful and speedier than if you’re not prepared. Good luck in your first home buying experience. It is worth the work!
Talk to a mortgage consultant about your next step: mortgage pre-approval. It's a vital step in the home buying experience. Not only will real estate agents love you, but you'll love the experience much more if you know how much house you can afford. Click the button below to get pre-approved and make sure you're on the right track.