3 Things To Do Before Applying For A Mortgage

Applying for a mortgage can be an exciting time. Many people look forward to the day when they will be able to become homeowners. But that doesn't mean that the mortgage process is easy or simple. Instead, many people have a hard time getting the approval that they desire and become frustrated in the process. Here are a couple things you can do to improve your chances of getting a home loan.

1. Pay Off Debt

Most people have at least some sort of debt, whether it is student loans, a car payment, or a credit card. It is important that before you apply for a home loan that you pay off as much debt as possible. This is because when the mortgage lender calculates how much they will loan you for the house, they will directly calculate it from how much debt you have to how much money you make. This is called your debt to income ratio and it is the single most important number when it comes to buying a house.

The more debt you have, the less house you will be able to afford. This is why even paying off a credit card can make all the difference when it comes to getting that home loan.

2. Avoiding Opening New Lines Of Credit

Before you purchase a house you should avoid opening any new lines of credit. This is because each time you open a new line of credit, even just a store credit card, it can hurt your credit score. Your credit score will play an important role in determining your interest rate on the house. This is why it is vital to protect your credit score in the months leading up to buying a house.

In addition, it is easier to qualify for a car loan, credit card or student loan than it is to qualify for a home loan. Thus, get the home loan first, and then buy the new car.

3. Be Wise In Your Spending

Lastly, you should do everything that you can to show that you are financially responsible. You should be saving where you can and spending less than you earn. This is because the mortgage lender will also ask for bank statements to see your financial history. If they see that you are responsible with your money, that you have good savings and that you can be trusted with a debt, then you are more likely to get approved.

By doing these three things you can better prepare yourself to get qualified for a mortgage. To learn more, contact someone like a mortgage broker st paul.