Whether this is your first time buying a home or you are a real estate tycoon, these 15 tips will help you in the process of qualifying for a mortgage and ensure you meet the minimum mortgage requirements.
Establish Your Monthly Payment Amount
A key to being a successful homeowner is having the peace of mind that you’ll be able to afford your new home. With our mortgage estimator, you can get an idea of what your mortgage will be.
Determine Your Home Loan Amount
Understanding how much you can afford is paramount to qualifying for a mortgage. Use our trusted home loan calculator to estimate what your monthly payments will be based on your loan amount.
Consider Your Credit Score
Your credit score is important when qualifying for a mortgage. Your credit score makes a big difference in determining how much you can afford, which is why it’s one of the first things a lender will check.
Budget Your Down Payment
Having a clear understanding of your financial situation will help you determine what kind of down payment is right for you. A bigger down payment will decrease the total amount owed and monthly payment. A lower down payment will increase the total amount owed and monthly payment but will be less of an investment upfront.
5. Gather Documentation
Having your documentation in order will help you meet minimum mortgage requirements and save you time and frustration when qualifying for a mortgage. Such documentation includes:
- Pay stubs, W-2s, or other proof of income
- Tax returns
- Bank and mortgage statements
- Photo ID and Social Security card
- Monthly debt payments
Know Mortgage Interest Rates
When getting approved, understanding how interest rates will affect your payment is important. Get current mortgage rates fast and know your rate today.
Verify Your Employment
Before you begin the process of buying a home, analyze your employment situation, collect documentation and be ready to show proof of steady, consistent employment to your lender. This will help you when qualifying for a mortgage.
Consider Finance Options
With multiple finance options available, it’s important to know which is right for you. For example, with a fixed-rate mortgage, the interest rate is set and will not change. With an adjustable-rate mortgage, on the other hand, the interest rate may go up or down.
Pay Down Debt
Debt-to-income ratio (DTI) is a term you will hear when qualifying for a mortgage. It’s a finance measure that compares one’s monthly debt payments to their monthly gross income. The less money you owe the easier it will be to get approved.
It can be tempting to fudge a little when in pursuit of buying your dream home. However, being honest will ensure the home you purchase and its monthly payment will be within your comfort zone.
Save Your Money
Purchasing a home requires a substantial amount of money. To ensure the home of your dreams is within reach, have money saved specifically for this purchase.
Know What Pre-Qualified Means
Prequalifying is the first step in qualifying for a loan. Getting pre-qualified will give you an idea of the loan amount you’ll likely qualify for.
Know What Pre-Approved Means
Pre-approval is the second step. It is a conditional commitment to actually lend you the mortgage.
Avoid This Common Mistake
Avoiding a down payment when purchasing your home can be tempting, but it can also leave you with a monthly payment that is simply too high to manage. Before acting on this type of payment option, consult with a trusted professional.
Shop Around for a Trusted Lender
When it comes to choosing a lender for your home purchasing endeavors, you have a lot of options. At Wyndham Capital, we’re passionate about providing you with quality education about how to qualify for a mortgage. We’d love to help you get started today.