5 Important Steps On The Path To Mortgage Pre-Approval

Real Estate Blog

One of the best things you can do for your home search is to seek preapproval for a mortgage first. A pre-approved loan can save you a lot of time and make you far more desirable to sellers.  

1. Get Your Credit in Order

One of the first things any lender will look at is the status of your credit. No matter your credit status, you can improve it in a number of ways, such as :

  • Check your free credit reports
  • Seek a credit repair service
  • Bring all bills to current
  • Do not create any new debt

 Improving your credit is a process, and some may have a harder time of it than others. However, if you improve your credit, you gain far more benefits than just a better chance at preapproval for a loan.

2. Improve Your Debt to Income Ratio

Lenders will take your DTI into account, so you should know what it is and work towards lowering it before seeking pre-approval. Your debt-to-income ratio is a measurement of how much money you spend compared to how much money you make. You can use a DTI calculator to find your specific DTI percentage.

Getting that number as far below 43% as you can goes a long way towards a preapproved mortgage loan. If you're trying to improve your credit, you will likely lower your DTI as well in the process. Learning to create and maintain a budget can help you the most with DTI.

3. Keep Adding to Your Down Payment Fund

The more money you have available for a down payment, the more appealing you look to lenders. Having more money available can also offset some of the other qualifications for a preapproval.

Whenever possible, contribute to your down payment fund, even if you already have a healthy percentage of a home's purchase price. Besides, you never know when some fee, tax, repair, or another cost will rise up just around closing time. Having the extra money can help.

4. Keep Working and Filing Taxes

A stable work history can win you a lot of points when it comes to pre-approval. Your employment stands as proof of at least some of your claims to income. Lenders will want verification of employment, pay stubs, and W-2s.

5. Don't Stop Trying to Seek Preapproval

Lenders base their decisions on several factors. Even the things listed here can have caveats depending on other aspects of your finances. For example, poor credit doesn't automatically disqualify you.

Get your financial situation in the best shape you can, then shop around for lenders. See what they say and adjust your actions accordingly. Preapproval isn't absolutely necessary for a home purchase, but it puts you in a far better position for purchasing the home you really want. For more information, contact your local real estate agent. 

Share  

29 April 2018

Choosing Beautiful Real Estate

I have always been someone who is passionate about making the world around me more beautiful, which is probably why I was drawn to real estate initially. I really wanted to create a place where me and my family could spend a lot of time together in a peaceful, relaxing place, so I started looking for places in my area that were fit for the job. Within a few months, I was able to find an incredible property that was within my price range, so I purchased it as soon as possible. This blog is all about choosing beautiful real estate.