Applying for a mortgage can be a stressful situation for anyone. You can simplify the process by making sure your finances are in order prior to applying. Here are several tips to help you qualify for the best mortgage for your financial situation.
Choose the Best Mortgage Loan
Mortgage loans basically come in two flavors: mortgages with adjustable interest rates, and mortgages with fixed interest rates. If you choose a mortgage with a fixed interest rate your payments will be fixed for the duration of the loan. Adjustable Rate Mortgages come with variable interest rates that change based on prevailing interest rates and your lender’s markup.
How Much of a Mortgage Can You Afford?
Before you apply for a mortgage it is important to prepare a budget to determine how much of a mortgage payment you can afford. There are a number of free mortgage calculators you can use to determine how much your payment will be based on the purchase price of your home, your taxes, and insurance.
Take Stock of Your Credit
The first thing a mortgage lender does upon receipt of your application is run your credit. If you have errors or late payments this will reduce your credit score and raise the interest rate you will qualify for. You should request a copy of your credit report from each of the three credit agencies and carefully scrutinize these records for errors. If you have late payments on your credit reports, you might want to consider waiting six months before applying to build up your payment history. You can learn more about your mortgage options, including mistakes to avoid by registering for our free mortgage guidebook.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
