Easy Mortgage Tips

Educate yourself on the mortgage process.

Getting a home mortgage loan isn't as easy as walking into a lender or broker's office and completing an application. Lenders have tight lending guidelines, and not everyone qualifies for a mortgage. Knowing what to expect when meeting with a lender can prepare you for the process and increase the chances of an approval.

Prepare Documentation

Mortgage lenders request several different documents when deciding if you qualify for a mortgage loan. Common documents include your most recent paycheck stubs, W-2s, tax returns and bank statements. Being prepared and having this information ready can speed up the application process.

Check up on Your Credit History

Credit requirements vary depending on the lender and loan program. However, the higher your score, the better your odds of getting a mortgage. Past credit problems may not hinder your chances of acquiring financing. Still, it doesn't hurt to make credit improvements to improve your score. FHA loan lenders approve applicants with scores around 620, but other lenders require higher scores -- perhaps 680 or higher. Paying bills on time and lowering debt helps improve your credit rating.

Complete the Pre-Approval Process

Mortgage pre-approvals aren't required to purchase a home. However, knowing how much you can afford before searching for a property saves you the bother of touring homes beyond your reach. Contact a broker or lender to compare mortgage loan programs and complete the application process. Forward the requested documentation and give the lender permission to check your credit history. Once approved, your lender will provide a pre-approval letter for your records.

Be Aware of Extra Fees

Getting a mortgage loan isn't cheap, and there are a number of out-of-pocket expenses. Knowing and preparing for these expenses can smooth the mortgage process. Initial expenses include credit application and credit report fees paid to your lender. Then there's a deposit paid to the seller once you've placed a bid on a property. Other common fees include home appraisals and home inspection costs. Closing costs and down payments are generally also large expenses in the mortgage process. Closing costs can range between three and five percent of the sale price, whereas down-payment minimums vary according to the loan program.

References

• Home Loan Learning Center: Qualifying for a Mortgage
• FHA Home Loan: FHA Loan Qualifying Summary
• Bankrate: Closing Costs Come in Four Varieties