Getting a mortgage is probably one of the most stressful and exhausting parts of the homebuying process.
Since the housing crisis and the market crash that started back in 2007, mortgage applications and reviews have been more detailed and strict than ever, requiring endless paperwork and extensive income verification.
There are various things to consider when shopping for a mortgage that can impact the success of the entire mortgage process and impact how much you spend – not only on obtaining the mortgage but also on your home over the long run.
To help first-time homebuyers tackle all these challenges successfully, here are mortgage lending tips suggested by leading banks and financial institutions. So, fasten your seatbelts, and let’s get started.
Tips for Obtaining Mortgage
#1 Gather all your documentation
The first thing that you need to do for successfully obtaining a mortgage is getting all your financial paperwork in order.
Key papers you need to keep with yourself while obtaining a mortgage include recent pay stubs, your bank statements, salary slips, and tax returns.
Self-employed applicants will need to provide two years of tax returns and their most recent profit/loss statement showing revenues, expenses, and costs during a fiscal year.
#2 Get yourself in top financial shape
In addition to getting your paperwork done, it’s a good idea to get yourself in top financial shape. This will increase your chances of obtaining a mortgage.
Being in top financial shape means improving your financial profile. For starters, avoid carrying excessive debt.
Your debt-to-income ratio is also a crucial factor that lenders consider when looking at your loan application.
Reducing debt could make your finances look more attractive.
Use the freed-up money to pay down debt or increase your down payment for the home, both of which could help you put in better shape when it’s time to apply for a mortgage.
Reviewing your credit history and score is another critical effort. If your credit score needs improvement, try making multiple or frequent payments using a credit card.
Lenders also look for job stability when they evaluate your ability to repay a loan.
#3 Shop around and shop more
Reviewing multiple mortgage lenders or mortgage shopping is a critical step – and it’s one thing that many first-time homebuyers often ignore. Most first-time buyers often just go with the first lender.
But you should never settle on the first lender you talk with.
Every company has different terms, and you should check with every company and go with the one with the most favorable conditions.
#4 Get pre-approved early
It’s more than heartbreaking when you find the perfect home, then find out that it exceeds your budget.
Getting a pre-approved loan can prevent disappointment later on. So, it’s essential that you get a pre-approved mortgage before going for home shopping.
These are the few tips that you should follow before going for a mortgage and home shopping.
Following these steps will increase your chances of obtaining a successful mortgage for buying the house of your dreams.