Despite the hurdles that the pandemic and frozen economy are creating, now may be an opportune time to buy your first home. And that’s where mortgages come in. A mortgage is essentially a loan that a borrower pays off in order to own his or her home.
In order to get approved for a mortgage, you’ll need to be sure all your finances are in order. Lenders are investing in you, the homeowner, so they’ll want to be sure you’re a qualified candidate. Follow these following tips to get approved quickly.
Here are some quick tips on how to get a mortgage for your first home.
Check Your Credit Score and History
Having a good credit score and history is going to be a great first impression when applying for your mortgage. Your credit report is going to show your borrowing history and help lenders determine if you’re a good fit. Make sure everything is accurate and up-to-date.
Calculate Your Income and Expenses
Be prepared to get personal. You’ll need to record and share your income and monthly expenses with your lender. This can include student loan debt, car payments and other monthly expenses. To get approved for your mortgage, lenders want to make sure your income-to-debt ratio is healthy. You may need to provide your last few years of federal tax forms and a few months of your latest pay stubs.
Determine How Much House You Can Afford.
After calculating your income and expenses, sit down and determine how much house you want to buy. Keep in mind the following homebuying factors:
- Your home’s downpayment
- Property taxes
- Homeowner’s insurance
- Your expected mortgage interest rate
Small differences between mortgage rates can make a large difference in the future. Savings add up quickly over the lifetime of your loan, so be sure to shop smartly.