Home Mortgage Tips Archives – Page 5 of 136

15

Sep

Home Mortgage Tips

Understanding the Differences Between ‘Prequalified’ And ‘Preapproved’ For a Mortgage

Understanding the Differences Between 'Prequalified' And 'Preapproved' For a Mortgage Are you in the market for a new home? If you are going to rely on mortgage financing to cover some of the purchase cost, you will need to start the application process as soon as possible. However, what if you just need to know how much you will be able to borrow so you can start finding homes in your price range?

Let’s take a quick look at the difference between being ‘prequalified’ and ‘preapproved’ for mortgage financing.

The Process Starts With Prequalification

The first step in obtaining mortgage financing is to speak with a mortgage professional to get prequalified. After sharing some quick information about your financial assets, income, and any debts, your advisor will share a range of financing options and amounts that you may qualify for. Prequalification is typically done free of charge and either in person or over the phone.

Note that your mortgage lender will not be doing any digging in the prequalification stage. There’s no credit check and no hard look at your assets. Don’t get too excited if you are prequalified for a large mortgage as you will still need to be approved.

Once You Are Preapproved, You Are All Set

Preapproval, on the other hand, is a firm commitment to access to a certain level of mortgage financing. Your mortgage lender will require a variety of information to get an idea of your financial situation, your current and future employment, your level of risk and more. Once they have a good idea of how much mortgage you can afford, you will be provided with a conditional commitment letter. This letter outlines how much the lender is willing to offer to you as well as other vital information like your mortgage loan interest rate.

Speed Up The Process By Preparing Beforehand

Finally, it is worth a mention that you can speed up the mortgage process by having all of your application paperwork ready before the initial meeting. Gather up your most recent income tax returns, pay stubs and bank statements. If you have investments or other financial assets, document those. You will also want to be up front about any outstanding debts that you are paying off. The more prepared you are, the faster the application and pre-approval process will go.

Have you found the home of your dreams? Our team of mortgage professionals are ready to help you finance it. Contact us today and we will be happy to assist you with getting both prequalified and approved for a mortgage.

13

Apr

By First Rate Financial Group

Mortgage Tips

How to Run a Quick Financial Health Check Before You Apply for a Mortgage

Are you planning on using a mortgage to help cover the cost of a new home? If so, you will want to prepare your finances and figure out how you will manage all those wallet-draining monthly expenses. Let’s take a look at how to run a quick financial health check to ensure you are ready to apply for a mortgage.

Update (Or Start) Your Monthly Budget

First, it is essential to get the basics out of the way. If you haven’t already, it’s time to start a monthly budget to keep track of your income and expenses. Once you have a mortgage, it will be important to prioritize your monthly payments so that you don’t end up falling behind.

Starting a budget is easy and can be done with mobile apps, software, a spreadsheet or a pen and paper. List all sources of income so that you know exactly how much cash you are working with. Then, list out every one of your expenses. It can be tough to remember them all, so consider using debit and credit card statements from the past few months as a reminder.

Get A Copy Of Your Credit Report

Next, you will want to get a copy of your credit report so you can see what potential mortgage lenders will see when assessing your financial history. This is a free service that you can request once per year, so be sure to take advantage. Note that you will want to use government-approved websites for requesting your credit report. Be wary of scams.

Do You Have A Down Payment?

A down payment is not required for every home purchase, but having one saved up can make the buying process easier. The amount you will want to have saved up will depend on the cost of your home, whether you plan on carrying private mortgage insurance and a variety of other factors. If possible, try to save up an amount close to (or more than) twenty percent of the home’s purchase price.

Ready? Chat With A Professional

Now that you have run a quick financial health check, it is time to meet with a mortgage professional to discuss your options.

24

Mar

By First Rate Financial Group

Home Mortgage Tips

3 Things That Will Absolutely Kill Your Chances for a Mortgage Approval

3 Things That Will Absolutely Kill Your Chances for a Mortgage Approval If you’re about to seek approval for a mortgage, you’ll want to ensure you have a solid credit score and clean financial records to boost your likelihood of being approved. There are certain characteristics that lenders want to see in a mortgage applicant before they agree to give a loan, and you want to prove that you’re a responsible borrower. But certain behaviors can easily tank your application and crush your home ownership dreams.

Before you seek approval, make sure your finances are in order. Avoid these three mortgage-killing habits while your lender evaluates your loan and you’ll quickly find yourself holding the keys to your new home.

Using Up Most Of Your Available Credit

It can be tempting to start buying furniture when your mortgage is about to be approved, but you’re better off waiting on the shopping trip until after you get the green light from your lender. Using a significant amount of your available credit – or applying for new credit – will impact your debt-to-income ratio and change your credit score. You might even end up getting yourself a higher interest rate or reducing your credit score to below the qualifying range – so don’t go credit-crazy until after you’re approved.

Being Late On Your Monthly Bills

Payment history makes up one third of your credit score, so you’ll want to make sure you pay all of your bills on time and in full if you’re looking for a mortgage. A single 30-day late payment on a bill can easily knock 50 to 100 points off your credit score. Even worse, some lenders require a full year of on-time payments before they’ll even consider you for a mortgage.

Co-Signing Someone Else’s Loan

Co-signing on a loan is generally risky under any circumstances, but if you’re trying to get approved for a mortgage, taking on liability for someone else’s debt will change your debt-to-income ratio. Being on the hook for a debt you don’t own makes you look like a risk to lenders – if the primary borrower on the loan you co-signed stops making payments, you’ll need to pay the loan, and that could divert your cash away from your mortgage.

Getting approved for a mortgage is a critical part of the home buying process, but too many would-be homeowners torpedo their own chances of getting a mortgage by making poor decisions. Contact a mortgage professional near you to learn how you can give yourself the best possible chance of getting approved for a mortgage.