Recommendations For Your Home Loan Application Process
Getting the loan for your home mortgage is a big part of buying a home and you should treat it as such with careful preparation and attention to detail. Here are some recommendations to help you out in your upcoming home purchase loan approval process.
Protect Your Credit
Your credit is an important aspect to getting a home loan, so some attention should be put into your efforts during the home search and mortgage pre-approval process. Once you start the application pre-approval for your home loan, you don't want to make any changes to any areas of your finances and credit. This means that you should not change jobs or apply for other new credit. And you should not charge up extra debt, as it is going to show up on your credit report. This is one of the more important areas of your credit approval process, and your mortgage broker and underwriters are going to look closely at it during your loan approval process and up until the loan closing. If any aspects of your finances change, such as if your income goes down or if you have several credit checks on your credit file, it can cause your home loan to be denied at the last minute.
You should also take some time to review your credit at the onset of your loan process to make sure there is nothing unusual or unexpected on your file. You may have a credit card opened that you have forgotten about and don't use that could be pulling your credit score down. Or, for example, if you find errors on your credit file showing you made several payments late on a loan. You can and should dispute these and any other errors immediately through the credit bureau agency that is reporting them. They will investigate the error and correct it on the report so your mortgage broker has a full and accurate credit file in which to review for your loan.
Evaluate Your Spending Budget
After you have begun to work on your credit report and score, you will want to take a good look at your debt-to-income (DTI) ratio and find out what you can afford. Your lender is going to pre-qualify you for a mortgage loan amount, which is the limit they will lend you for a home. This amount does not have to be the actual amount you spend, as it is the lender's allowance. You can find a home that costs less than your pre-qualification amount and still have a home that fits your needs and your personal budget. You don't want to overspend and end up with a mortgage payment that maxes out your finances each month or even puts you behind.
Spend the time needed to list all your expenses and financial obligations, including saving for retirement and for a home repair savings, to establish a budget for your mortgage payment, including property taxes, insurance, and mortgage insurance, if it is required.
For more information on real estate loan lending, contact a lending institution in your area.