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6 Tips You Need to Know Before Applying for a Mortgage
Looking for a mortgage? Buying a home can be exciting but a little overwhelming. To make the process easier, here are 6 tips to guide you through the mortgage application process.
- Reduce your debt. Lenders look at your debt from credit cards, auto and student loans, and other sources. A large amount of debt can reduce the amount of mortgage money you get, or could cause your application to be denied. Need some help reducing your debt? Check out these 6 tips.
- Meet with a mortgage loan consultant. It’s never too early in the process to meet with an experienced, reputable mortgage loan consultant (MLC) to help you evaluate your situation. Your MLC can help you learn about the various loan programs and products available. Wondering which mortgage type works for you? Check out this handy chart .
- Review your credit history and scores with your loan officer. Credit scores are based on a number of factors, including the length of your credit history, payment record, total credit, and the number of recent inquiries for credit. Credit scores play an important role in determining the interest rate of your loan, so it’s important to make sure your record is accurate. Credit scores that you obtain from AnnualCreditReport.com or other services may be different from the credit score a lender will use.
- Prepare your paperwork. In addition to completing an application, you’ll need a view of your financial picture (income, assets, paystubs, tax returns, etc.). Be sure to keep records of everything you submit.
- Understand interest rates. Your loan representative will explain the interest rates for which you qualify. Fixed interest rate loans are set at a specific rate that won’t change for the life of the loan. Adjustable-rate mortgages (ARMs) may change from year to year, although they may have a fixed-rate for a period of time.
- Know what you can afford. Remember that every home comes with costs you may not anticipate. In addition to the down payment and closing costs, plan for homeowner’s association fees, utilities, home owner’s insurance, and property taxes, as well as improvements or unexpected repairs.