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Before You Go Applying For A Mortgage…

by Mike

If you’re thinking about buying a home in the near future, now is the time to start preparing.  The last thing you want is to find your dream home and be all ready to make an offer only to realize there’s something wrong with your credit and you can’t get approved for a mortgage.

Being approved for a home loan isn’t as easy as it used to be when lenders were willing to write a blank check to anyone with a pulse.  These days lenders are following much more stringent guidelines and even a few points on your credit score could mean the difference between the home of your dreams and disappointment.

Even if you’re not planning on shopping for a new home until next year, you should pull copies of your credit report from the three big reporting agencies (Experian, Equifax and TransUnion).  Go over each of them with a fine-toothed comb and look for any errors.  Look for things like late payments, accounts that don’t belong to you, and accounts that are paid off buy not marked as such.  Any of these could have a negative effect on your credit score which would cause your loan application to be rejected.

If you spot any errors, it’s up to you to get them fixed.  It could be as simple as calling your old bank and asking them to notify the credit reporting agencies that you did indeed pay off your car loan so it no longer shows as an open account.  The sooner you get started on fixing your credit score the better!

You should also be keeping an eye on interest rates and shopping for a mortgage.  Use an online mortgage calculator to determine how much you can afford to pay each month, and don’t forget to add in property taxes and insurance!  Keep in mind that the amount the bank may be willing to loan you could be more than you can comfortably afford.   Don’t just go by their numbers…in the end it is YOU that has to make the payment every month.

If you want to save yourself some time and legwork you can consider hiring a mortgage broker to shop around and find you the best deal.  Obviously they will charge you a fee for this service but it may save you some money if they can get you a loan with lower closing costs or a lower interest rate.

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{ 2 comments… read them below or add one }

Money Beagle

I’ve never gotten the whole business of mortgage brokers. I know that they can theoretically save you money, but at a cost. With the internet and being able to compare rates all over the place with a few buttons, I guess I don’t understand the need.

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Barb Friedberg

Tell me about it!!! We are starting on the fourth month of buying a short sale condo. Our loan was finally approved after giving them more info than I ever imagined. I can’t wait til it is all over and we are in our new home!

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