Are you looking to purchase a home this year? Here are some tips to help you increase your chances of success with the mortgage process.
Is 2022 a better time than 2021 to buy a house? It’s difficult to say. The year has seen a lot of housing inventory and high home prices. These trends could continue into the new year, making it another difficult period for buyers.
If you are up to the challenge of purchasing a home, it will help to prepare yourself to be in the best position to get a mortgage. These are five things you should know.
Examine your credit report
Credit reports are a summary of your borrowing habits and history. This information mortgage brokers consider when deciding whether you are a suitable borrower. You should carefully review your report and ensure there are no red flags such as delinquent or unpaid debts. It is worth addressing any issues that may exist before you apply for a mortgage.
You’ll also want to ensure your credit score is free from errors, such as delinquent accounts you’ve settled. You should correct any errors you find before you apply for a loan.
Check out your credit score
Many consumers are shocked to find that their credit scores don’t appear on their credit reports. You may need to log into your bank account or credit card account in order to get this number. You may also need to pay for it.
It doesn’t matter what, it is important to understand your credit score and be satisfied with it. Higher credit scores are more likely to be approved for a mortgage and lock in a competitive rate. If your credit score is in the middle to upper 700s or higher, you will likely get the best rate offered by any lender.
Lower your debt load
Lenders might be less likely to approve you for a mortgage if you have a lot of debt. Before you submit a mortgage application, you might want to pay off any debts.
If you do plan to reduce your credit card debt, it is important that you first address it. Your debt to income ratio could improve and your credit score could be raised by reducing your credit card debt.
Take a look around
Each lender has its own rates and closing cost when it comes to mortgages. These are the fees that you will pay to close a home loan. You might get a better deal if you gather offers from multiple mortgage brokers.
You’ll need to rate shop quickly, ideally within 14 days. Every time a lender pulls your credit reports to determine if you are a qualified borrower candidate, it counts towards a hard inquiry.
It can be difficult to borrow money if you have too many hard inquiries. However, if multiple mortgage brokers make hard inquiries within a short time period for the same purpose (getting mortgage), all those inquiries will be counted together and your credit score will be minimized.