Applying for a mortgage is a huge step in anyone’s life.
With home prices in SLC rising continually, the thought of having enough money to buy a home can seem ridiculous to some. But, we’re here to tell you that there’s nothing to be afraid of.
In this post, we’re going to give you a quick guide to follow before you apply for a mortgage. Follow these steps, and you’ll set yourself up for success and a brand new home in the very near future.
Check Your Credit Score
It’s a good idea to check your credit score before you contact a lender to apply for a mortgage. Every single lender will do this when you apply, so doing it yourself first will curb any unpleasant surprises if there are any to be had. The closer you are to an 850 credit score, the better off you’ll be in the eyes of the lender.
Ask for a full credit report when you apply and review it for any errors. Though uncommon, small mistakes can have huge implications on your credit score, and thus, your ability to get the mortgage terms you want. It’s good to know your credit score prior to having a conversation with a lender.
Pay Down Your Debts
Dedicate some time and money to paying down your debts. This is going to help immensely with the mortgage terms that you’ll qualify for. But the fact of the matter is, if you’re holding onto a lot of debt, lenders will see that as a liability and punish you for it because they qualify you based on your debt to income ratio and credit score.
The debt to income ratio compares how much you owe each month to how much you earn. If you have a large car payment, but the car is almost paid off, it might make sense to pay that car off faster so it doesn’t count against your debt to income ratio, so you can afford and qualify for a larger mortgage.
Paying off the car could also increase your credit score. Most lenders can help you determine which actions will have the greatest impact. If you need a lender to help you with this, please contact me and I’ll point you in the right direction.
Put Spending On Hold
One way to save money for a house and pay off your debts is to put extraneous spending on hold. Cut out things like expensive dinner dates, expensive coffee shops, streaming services you don’t use, extravagant vacations and shopping for new clothes for a while.
Give yourself a strict budgeting system while you’re saving the down payment for your mortgage. The more money you save for your down payment; the bigger and better your mortgage terms will be and the more competitive you’ll be when making offers on homes that have multiple offers on them.
Organize Your Assets
Get all of your assets in order, starting with your accounts. Make a list of all financial accounts, like banking, credit debt, student debt, and investments, and have them in a portfolio or on a spreadsheet. You’ll also want to have your last two years of tax returns ready when it’s time to talk to a lender.
Being able to access this information at a moment’s notice will make for a smoother conversation with your lender, not to mention, it’s going to help you budget and be focused on saving money for the mortgage you’ll be applying for down the line.
Get Ready to Apply for a Mortgage
Once you’ve spoken to a lender and are pre-approved for a mortgage, you’ll know how much you qualify for and you’ll be ready to start searching for your dream home in Salt Lake City. At SLC Homes, we offer excellent home buyer representation and services. So when you’re ready to start searching for a home, Kevin Coyle can help you seal the deal.