Are you in the market for a new home? If so, it’s important to start preparing for the mortgage process well in advance. Here are seven things you should do before applying for a mortgage.
- Get your credit score in order
The first thing you need to do before applying for a mortgage is to get your credit score in order. This will give you an idea of whether you qualify for a loan and what interest rate you can expect to pay. You can get your credit score from a variety of sources, including credit reporting agencies, banks, and lenders.
- Be aware of your budget when buying a house
Before you start shopping for a home, it’s important to know how much house you can afford. This will help you narrow down your search and avoid getting in over your head financially. There are a number of online tools that can help you calculate your monthly mortgage payments, including taxes and insurance.
- Save for a down payment
One of the biggest hurdles to buying a home is saving for a down payment. Most lenders require a down payment of at least 20 percent of the purchase price. If you can’t come up with that much money, you may be able to get a government-backed loan that requires a smaller down payment.
- Get pre-approved for a mortgage
One of the most important steps in the home-buying process is getting pre-approved for a mortgage. This means that you’ve been approved for a loan up to a certain amount and at a certain interest rate. Pre-approval gives you a leg up when it comes time to make an offer on a house because it shows sellers that you’re a serious buyer.
- Compare mortgage rates before taking out a loan
Once you’ve been pre-approved for a mortgage, it’s time to start shopping around for the best interest rate. Rates can vary widely from lender to lender, so it pays to shop around. You can use an online tool like Bankrate’s mortgage comparison tool to compare rates from a variety of lenders.
- Get your paperwork in order
When you’re ready to apply for a mortgage, you’ll need to gather up some important paperwork. This includes things like your tax returns, pay stubs, and bank statements. Having all of this information handy will make the application process go much smoother.