What to Do Before Applying For a Mortgage

Estimated reading time: 3 minutes

The mortgage process can sometimes feel shrouded in mystery to first-time homebuyers. By following these tips, we hope you’ll feel as confident as can be when it’s time to begin your mortgage journey.

Check Your Credit Score and Reports

Having a higher credit score helps you qualify for a mortgage, obtain a lower interest rate, and gain a pre-qualification or pre-approval letter. You can get a free copy of your credit report from each of the major credit bureaus once a year. Doing this step early gives you plenty of time to correct any errors or discrepancies that may show up as a question mark in your application.

Pay Down Your Debts

An important aspect of your mortgage application will be your debt-to-income ratio (DTI). This metric is used by lenders to determine your ability to pay your monthly payments based on how much your gross monthly income goes toward debts like car payments, student loans, and credit card payments. By paying down your debts and keeping them low, you can prove to your lender that you are less likely to default on your mortgage. Even if you can’t eliminate all of your debt completely, chipping away at it as much as possible is still helpful.

Limit Your Credit Spending

We’ve all fallen into retail therapy habits occasionally, but don’t make small or medium purchases that could jeopardize your large home purchase! Any new debt you create may negatively affect your DTI and could keep you from qualifying for a loan.

Organize Your Assets

Assets prove that you have the means to pay for the fees associated with the mortgage process and your first couple of mortgage payments. Be ready to provide documentation for all assets, and most likely, it will need to be updated during the process. Be sure you keep all your documentation in an easy to access area to send promptly to your lender.

How Much Home Do You Need?

Determining the expected length of time you’ll live in your new home and “how much” house you’ll need will help you develop proper expectations before you begin house hunting. The information can also be used by your lender to determine which loan program and interest rate would suit your circumstances best.

Begin Your Own Mortgage Education

The more information you have about the process, the more prepared and confident you’ll be as you begin to reach mortgage milestones. We recommend reading more about the homebuying and mortgage processes and using your Loan Originator as a resource for any questions you need answers to.

Mortgage Calculators

Mortgage calculators are excellent tools used to determine the realistic expectation of what you can afford. They can give you an idea of what your monthly payments could look like based off things like the home price and your down payment amount.

Homeownership is Achievable

McGlone Mortgage is in your corner during every step of the homebuying journey. When you’re ready to find out how we can help you purchase the home of your dreams, contact us today.