Planting down roots and capturing your future is the American Dream. Mortgage lenders can help you achieve these goals, but you need to play by their rules. Here are some other things related to your mortgage application process, which the inexperienced borrower will soon come to know:
Credit Score: How does your credit score look? If it’s not above the mid-600’s you’re probably going to get a lot more scrutiny, and have a lot more hoops to jump through. However if your scores are above 740, you are going to be viewed a lot more favorably.
Affordability: Mortgage lenders also want to see that you have a realistic picture of your debt to income (DTI) ratio. The rule of thumb is that your mortgage can’t exceed 28% of your monthly income.
Down Payment: Another area where you can spend a lot of money is on closing costs. These can run as high as $4,000 on a $200,000 home, so you need to be aware of that. If you are a first time home buyer, or if you live in certain areas, there are down payment assistance programs available. If you think you might qualify for these programs, make sure to bring it to your mortgage lenders attention.
Savings: Mortgage lenders also want to see that you have some savings set aside. Buying a home is expensive, and there are always things that arise at the very last moment. Less scrutiny will be given to a healthy savings balance.
Pre-Approved: Getting pre-approved is another thing that a mortgage lender will view favorably. If you are going to go through the process of buying a home, you owe it to yourself to get pre-approved. There is nothing worse than finding the home of your dreams, putting in an offer, and then getting declined from your mortgage company.