It is not always easy to get a mortgage, especially if you have less-than-perfect credit. Being ready for the home-financing routine can make the process much easier. Being unprepared for a meeting with a lender may ruin your chances of getting a loan from that bank. Do the basic groundwork first, and you'll find that your chances of getting a mortgage will improve.
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Know Your Credit Score
One of the biggest mistakes that you can make when meeting with a lender is to not know your credit score. This can lead to a nasty surprise when the bank brings up your credit history. Visit the three credit bureau websites (Equifax, TransUnion, and Experian) to request a free credit report. Each company will give you a free report each year. Check this well before your meeting with the lender; there may be inaccurate information in your reports that is lowering your credit score. Get any false information taken care of before visiting a lender and you'll have a better credit score when you are trying to get a mortgage.
Shop Around for the Best Rate
Knowing your credit score allows you to shop around for the best possible mortgage rates. Many lenders have online tools that allow you to get a free estimate for a mortgage rate and see what the best offers are. Make appointments with the four or five lenders with the best rates, and then narrow down from there. Visit each lender and compare the terms of the mortgage offers you get.
Show Up Prepared
There is a long list of what you need to bring to your first meeting with a potential lender. This list usually includes W-2 forms, the last four paycheck stubs of anyone who will be listed on the mortgage and a list of your monthly expenses. If you are self-employed, you will also need to show at least a month of profits, losses and your previous tax returns. Each lender has a different set of requirements; call ahead and request a list if one is not mailed to you. Showing up with everything you need to get a mortgage improves your chances.
Be prepared for the mortgage process. Know the difference between fixed and variable rates, and which one is better for you. Read a book about mortgages or buying a home. Knowing more puts you in a better position to get a mortgage.
Have a Substantial Down Payment
A down payment of at least 3.5 percent (the minimum as of June 2009) is essential to getting a mortgage. Saving up the traditional 20 percent is a better option, gets you a better interest rate and makes a lender more likely to approve you for a mortgage. It may take a while to save up that money, but it can lower your monthly payments substantially and get you into a home much faster.
Qualifying for a mortgage loan requires following specific guidelines outlined by your mortgage lender. Many adults are interesting in purchasing a home,...
