Things You Should Do Before Applying for a Mortgage
Buying a house outright (for cash) is a considerable expense that many Americans don't have the good fortune to afford. While taking out a mortgage doesn't require as much of an upfront investment, it is a large commitment that requires serious thought. To make sure you're ready for homeownership, here are some things you can do before applying for a mortgage.
Fix Your Credit Score
It may seem cliché, but repairing your credit is probably the most important factor in getting a mortgage. After all, higher credit scores equal lower mortgage rates.
Organize Your Assets
Borrowers typically have to provide their previous two months' worth of bank statements to their lender. It's ideal to have a savings account with all the necessary funds and little activity in the past 90 days to show a trend of saving money.
Pay Down Debts
Lowering your debt results in more purchasing power because when you have less debt, you'll be able to afford more with your current income. A lower debt to income (DTI) ratio improves your chances of getting approved for the loan.
Budget Yourself
If you cook more at home, eliminate unnecessary purchases, and don't spend frivolously, your savings will start to grow! Continuing to charge will add credit card debt which will eat into your DTI ratio, drop your credit score, and cause you to qualify for less.
Consider How Long You'll Be in The Home
Not everyone needs a 30-year mortgage. For example, if you're just buying a starter home, then a five-year adjustable rate may be easier for you. If you're looking at a forever home, however, a 30-year fixed might be exactly what you want.
ÂChoose Wisely When Applying
Make sure to select a lender with a large array of loan choices and who has the experience to help you select the right one for you! Getting the wrong loan can have significant negative effects for your financial future by causing you to overpay by thousands of dollars over the life of the loan.
Take the First Step with Butler Mortgage
For over 25 years, Butler Mortgage has worked with both first-time and seasoned buyers looking to obtain a mortgage loan in Central Florida. Let us help find the best loan solution for you by calling 407-931-3800 or by filling out our free consultation form online.
