Thursday, February 9, 2017

Get the Best Terms: 5 Things to Do Before Applying for a Mortgage

Applying for a mortgage is more complicated than a lot of people might think, precisely because crediting and credit scores are extremely complicated. 

The process can be especially daunting to first-time home buyers or people who have never had to take out a loan before. Fortunately, there are some pretty tried and true methods for making the loan process as painless as possible. 

We'll go over five things you should do before applying for a mortgage.

1. Familiarize Yourself with the Process

Do your homework and research ahead of time to know what will be expected of you, your lending institution, how much time you should allow and what information you will need to provide, among other things. 

For example, requirements for purchasing property vary between states and even between properties and complexes, so it's a good idea to know what upfront payments might be required. 

You should also be prepared to provide a copy of your credit report.

2. Clean Up Your Finances

Before going to apply for a mortgage, do what you can to eliminate any bad things from your finances. 

This can include paying all outstanding bills, debts and credit card debt. Run a credit check to know where you stand, and do not make any major purchases or take on additional debt before you try and get home financing.

3. Prepare to Answer the Tough Questions

When you meet with your loan officer, you will be asked about any red flags they see in your credit history. 

Just like in a job interview, you need to come prepared to give an acceptable explanation for odd occurrences in your bank balance and financial history, such as debts or where significant amounts of money that isn't a usual paycheck comes from.

4. Decide What You Want

There are different types of mortgages and you need to decide exactly what you want before you turn in your application. 

For example, would a fixed-rate or adjustable-rate mortgage be better suited to you? How long do you want the term to be? 15 or 30 years is common. 

A financial adviser, your lender or outside sources can inform you of all your options and give you the best advice for your situation.

5. Get Quotes

Many people do not do this, but it is a good strategy that will likely get you a better deal than you would have otherwise. 

ou shop around for most major purchases, from contractors to cars, so why not for your mortgage? 

Instead of just going to one lending institution, applying for a loan, getting approved and going to buy your house, get quotes from multiple and go with the best one.

It's important to prep and do your due diligence before applying for a loan in order to secure the best deal you can on financing for a new home. 

So keep these five things in mind and act on them before you apply for a mortgage for the best possible outcome.

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