If you’re planning on buying a house, the first step of the process involves stepping into the lender’s office, not an open house. Applying for a mortgage can be frightening, especially when your future home-buying plans depend on it.
So, before you apply for a mortgage, you should prepare everything in advance to increase your chances of getting pre-approved. What exactly do you need to do? Below, you’ll find all the requirements you need to obtain pre-approval.
Obtain Proof Of Your Income and Job History
Part of the mortgage information most lenders need is proof of stable income from the past two years. Collect all recent pay stubs and other proof of additional income, such as bonuses or tax returns.
The lender needs to confirm that you have enough finances to pay off a mortgage. They’ll even ask for your employment history to make sure you have a stable income.
Have Good Credit
Having a good credit score is an important part of the pre-approval process. With a credit score of 620 or higher, your lender can see that you’re good at paying on time and that your history of borrowing money isn’t too bad. A low credit score indicates the opposite, and in these cases, you’ll have to pay a larger down payment.
Proof of Assets
Lenders will also want to make sure you’ll be able to pay off the mortgage in case you encounter issues with your finances, such as losing your job. They’ll want to look at your assets, which include your savings account, taxable investments, and retirement accounts.
Pay Off Your Debts
At the end of the day, a mortgage is a debt. And if you already have a long list of debt to pay off, it’ll be hard to get pre-approved.
Before applying, work on paying off as much debt as you can. The less debt you have, the more you can afford it.
Control Your Credit Card Swiping
Try to avoid unnecessary swiping and spending—at least for a while. Your lender won’t be happy to see that you have a history of spending unnecessarily. Plus, you don’t want to risk damaging your credit score.
Decide on Which Loan Type
A mortgage broker should know in what time frame you want to pay off the mortgage. Some mortgages vary between 15-30 years of payments, depending on the property type. So, consider all your mortgage options and conduct your research before making any final decisions with third parties.
Research On Your Lender
In other words, before trusting a lender, do some research. Look for their online portfolio and make sure it’s professional. Read online reviews about what customers have said and ask your lender for referrals before committing to them.
Check For Possible Errors in Your Credit Report
When gathering your credit information, search for any possible discrepancies. These include signs of potential theft, failed payments, or incorrect transactions. If you encounter any of these issues, do everything you can to gather proof to justify or explain the matter.
You Can Now Apply For a Mortgage!
Having to apply for a mortgage is complicated and requires lots of patience and time. But, by following the tips listed above, you’ll be able to get pre-approved for sure! If you’d like to read more financial advice, check out the rest of our blog!
