As Alameda mortgage lenders, we get approached by people all the time who are not sure what the crucial things they need to do are, to get their mortgage approved. There are a few key points that they need to know, to make sure that their mortgage process goes smoothly.
- Know Your Credit Score
Checking your credit is now quick and easy and can be done securely online. However, most people will not check, and still just assume that their score is good enough for a loan making sure to check your credit report saves you from the possibility that errors or identify theft have damaged your credit score.
Having a good credit score is a major factor in whether or not you are approved for a loan. According to The Lenders Network, a large percentage of lenders require a minimum credit score of 620 (580 for FHA mortgage loans) – and if your score falls below 620, lenders can deny your request for a conventional mortgage loan. Missing payments, late payments, high-interest debt, and numerous debts can all negatively effect and lower your credit score.
- Have Your Down Payment Ready
Walking into your lender’s office with zero cash is a quick way to get your home loan application rejected. Mortgage lenders now require a down payment for their services and while the amount will differ depending on the lender you go with, it is safe to assume that a 3-4% down payment will be needed.
A 20% down payment not only knocks down your mortgage balance, it also drops private mortgage insurance or PMI. Lenders attach this extra insurance to properties without 20% equity, and paying PMI increases the monthly mortgage payment. Get rid of this payment makes your mortgage payments smaller and more manageable.
Also keep extra cash ready for other costs, getting a mortgage also involves closing costs, home inspections, home appraisals, title searches, credit report fees, application fees, and other expenses. All of which you have to pay before your mortgage is finalized.
- Get Pre-Approved!
Getting pre-approved for a mortgage loan before looking at houses is emotionally and financially responsible. On one hand, you know what you can spend before you begin bidding on homes, and on the other hand, you avoid falling for a house that you can’t afford.
The pre-approval process is fairly easy: you would contact me, submit your financial and personal information, and wait for a response. Pre-approvals include everything from how much you can afford, to the interest rate you’ll pay on the loan. The lender prints a pre-approval letter for your records, and funds are available as soon as a seller accepts your bid.
This ensures that the process can more quickly and that most of the bug things such as rate, and loan amount are pre-determined.
- Know Your Limits
It’s a good idea to be honest with yourself and know exactly what amount you can comfortably afford so that paying mortgage doesn’t an unmanageable burden to you later.
While a lender or broker can certainly help identify an amount you can afford based on your credit rating and other factors, they don’t know the day-to-day costs that you deal with, such as groceries, expenses, credit card payments, and so on. Be sure to plan and have an amount in mind that you know you will be able to comfortably pay for a home.
Getting a mortgage is a big deal. EstaR Mortgage, is one of the leading mortgage lenders in Alameda, CA and we understand that clients have many concerns and questions about their mortgage options and situations, and we are here to answer them for you!
If you have any questions or want to begin the process, please contact us today!