Getting approved for a mortgage loan is one of the most important parts of the home buying process. Here are some things to keep in mind to help you get approved for a mortgage loan.
Calculate your income
It’s a good idea to hold onto pay stubs when your looking for a home, as your mortgage lender will likely ask for those. Having a steady flow of income will greatly increase your chances of getting approved.
Check your credit score
It’s important that before you apply for a mortgage loan that you check your credit score and get a hold of your credit history. Your credit score is one of the biggest factors that banks will look at to decide whether or not you will get approved for a mortgage loan. Your credit score should be at least 680 or higher in order to get approved.
Consider other debt you may have
When trying to get approved for a loan it’s important that you consider other loans that you may have. If you have larger loans it may be a good idea to pay those off first before you think about buying a house. Other large debt may greatly hinder your chances of being approved for a mortgage loan.
Determine your mortgage budget
Before you apply for a mortgage loan you should determine how much you can afford and how much you’re comfortable with paying. It’s a good idea to calculate the estimated total cost, including fees, taxes, and insurance.
Save up for a down payment
It’s important to remember that most mortgage lenders will require a down payment. Depending on how much your mortgage loan is may determine how much of a down payment you’ll need. As you work on saving, it’s always a good idea to assume you’ll need to put 20% down – this way if your mortgage lender doesn’t require this much, you can still afford the down payment plus use the extra to either go towards the principal payment or help cover any other additional costs on your new home.
Documents you may need
- A signed agreement with the seller
- W-2s from your employer(s) over the last couple of years
- Pay stubs for the last 30 days
- Tax returns going back a few years
- Proof of homeowners insurance
With the above points in mind, getting approved for a mortgage could be a bit easier for you to find your dream home.