4 Things to Consider When Applying for a Mortgage

Buying a new home is one-of-a-lifetime decision. So, if you are planning to buy a new home in the near future, you should start managing your finances from today. Amongst others, acquiring mortgage is a crucial task that needs special attention and planning. Here are some key considerations that you need to be mindful of when applying for mortgage.

1.     Analyze Your Credit Report

Start by analyzing your credit report. You can get detailed credit reports from Equifax, TransUnion, and Experian. Check all data carefully to make sure that the information therein is correct and accurate. Remember that your credit rating is the most significant factor when borrowing, so it should be accurate so as to ensure that you get the best mortgage offer.

2.     Improve Your Credit Score

Your credit score may not always be impressive enough to qualify for a good mortgage offer. However, you can improve your credit score by taking a few pre-application steps. Pay back all your previous credits and minimize your balances to zero. Besides, it’s ideal to cut down your extra purchases and avoid new credits, such as car loan, home appliances, and other large purchases on credit to keep your balances to minimal.

A common mistake that most home buyers make is closing down credit accounts right before applying for a mortgage. What they don’t realize is that this can increase their ratio of indebtedness to the total amount of credit which can do more harm than good to their credit score.

Remember that there is no quick fix to improving your credit score. It can only be achieved by showing consistency in paying off your balances and keeping your financial records clear.

3.     Manage Your Earnings

Lending institutions look for steady flow of income when lending. However, you should strictly avoid switching jobs or quitting one right before applying for mortgage. Keep proper records of your earnings over last few months to support your income claims.

If you are self-employed, you may have problem acquiring a loan as lenders see irregular income as a red flag. In such a case, a good sum of savings and a good credit score can be a great help.

4.     Make Arrangement for Down Payment

Your down payment may range between 5 and 10 percent of the total cost of the home. Since higher down payment can significantly boost lender’s confidence, it can help you reduce interest rate which may lower your overall value of the loan.

If you are still confused about applying for mortgage, contact FortBendConnect in Houston. As one of the most reliable real estate agents in Fort Bend County, the firm offers complete real estate solutions for all your home buying and selling needs. Contact the firm to discuss your requirements and start your home search today!