7 Tips When Preparing For A Mortgage

Are you getting ready to buy a house? You’ll want to make sure it’s the right time to move- you might be shocked if you just jump right in. You know you’re getting the best deals and interest rates on your mortgage.

We collected everything that you need in this article! Make sure to keep reading to feel more prepared for your new home loan. 

1. Check Your Credit First

First, you’ll need to check your credit score and get a full report. The first thing that lenders will do before considering you is to review your credit history. That means you’ll need to give it a look before they do!

You’ll need to make sure that your credit score is accurate. Sometimes, companies make mistakes that can hurt your credit score- you’ll want to let the company know if you find any issues. Filing credit disputes is easy, so you should always do this when you find errors.

2. Do Your Research 

Next, you’ll need to research before committing to a home loan! You wouldn’t want to get stuck with a mortgage that hurts you financially. Find and record loan terms, interest rates, and amounts.

You can determine which option will be the best for you. You must remain realistic about what homes you can afford. You’ll need to pay at least 20% for the down payment; you should save that much before applying.

Overall, you don’t want to do your research first. Mortgages can last 30 years or more- you won’t want to sign off on one that’s impossible to pay! You’ll hurt your credit score and worse if you do.

3. Put More into Your Down Payment

You’ll also want to put as much into your down payment as possible. The more you put in your down payment, the more favorably the lenders will view you. Plus, you won’t owe as much on each bill and will have more opportunities for better loan rates.

It takes a long time to build enough savings for a decent down payment. However, the more you can put towards the loan, the more benefits you’ll get. Financial experts recommend saving at least 20% for the down payment. Although this isn’t a direct rule- you can put down more or less money.

The sooner you can start saving for your down payment, the better off you’ll be. It can be hard not to touch your savings, but it’ll be worth it when you pay off a huge portion of your mortgage! Your monthly bill will be more manageable, so it’s important that you prepare now by saving.

4. Be Careful of Applying Too Often

You’ll need to ensure that you don’t apply too frequently for a home loan. When you apply for a mortgage, the lenders will make a hard inquiry on your crest report, lowering your score.

If you apply to multiple mortgages at once, this will harm your credit score more! You’ll need to make sure that you time them appropriately. When applying for multiple loans in only two weeks, the credit company won’t count it as more than one hard inquiry.

When you take your time filing applications over more than two weeks, it hurts your score the most. Because of this, you’ll need to select two weeks to apply and try to stick within that range.

When trying to get a mortgage, you need to take care of your credit score. If it drops too low, you won’t find any decent rates.

Overall, you must apply only within two weeks. If it doesn’t work out, you’ll want to wait a few months for your credit score to recover before you apply for another mortgage.

5. Save For Extra Expenses

You’ll also need to make sure to save for additional fees. These include the closing costs and move-in expenses you’ll need to cover. The closing costs are all the fees you’ll pay to finalize the mortgage. They usually come to about 5% of your mortgage amount.

Many people also forget that they need to cover move-in expenses. These include home repairs, furniture, and other essentials. You might also need to hire a moving crew to get you to your new home.

How much you save for your extra expenses depends on where you live and move to. If you’re moving across the country, you’ll need to save more than someone moving somewhere nearby.

In short, you will need to have enough money for surprises! You’ll want to know that you won’t empty your bank account when the move-in day arrives.

6. Check Out Options For First-Time Home Buyers

You’ll need to check out first-time home buyer programs in your area. Some places offer lower interest rates and even no down payment assistance, allowing you to get your dream home! Plus, you might even qualify for additional tax credits.

If you can participate in a first-time homebuyer program, it will significantly help your finances. You won’t want to miss out! However, these programs are always unique to your area, so you’ll need to check first.

7. Always Get a Preapproval Letter

It’s essential that you also get a preapproval letter. These letters come from a lender, offering you preset terms. Getting a preapproval letter lets lenders know that you’re serious about buying a home, so they consider you before others.

First, ask your lender about getting a preapproval letter- they’ll walk you through the steps! They’ll check your credit report first and debts, then let you know whether they can offer you preapproval. 

Make Sure You’re Ready! 

While you need to prepare your finances, you must also prepare emotionally for the move. Moving is very exciting, but it can also be a very draining process for many people.

In short, you’ll need to make sure that all aspects of your life are ready for the move. Once you’re ready, you can start saving for the down payment and researching mortgages from banks in your area.