7 Things To Know Before Applying For A Home Loan

With interest rates near historic lows many people are ready to buy their first home. Buying a home is a huge decision and there is a lot to learn before you start shopping for your dream home. Being prepared for what”s to come will help make the process easy and painless. Here are some things to keep in mind before you apply for your mortgage:

1.Learn the lingo “” There are many different types of mortgages out there and each offers unique benefits. Learn the basics about fixed-rate, adjustable-rate, FHA & VA mortgages. Understand how mortgage interest rates impact your monthly payment. Get to know more about points and PMI as well.

2.Determine what you can afford “” Use a mortgage calculator to figure out what you can afford including taxes and insurance. Consider making a higher down payment, if you can afford it, as it will reduce your mortgage payment.

3.Select your lender carefully “” Make sure you use a trusted lender. Look for solid credentials and only deal with a reputable company.

4.Don”t open accounts “” Don”t even APPLY for new credit cards, store accounts or any other lines of credit. Doing so could alter your credit report and have an impact on the type of loan you”ll be able to receive.

5.Don”t close accounts “” Keep all of your active accounts, even the ones with a $0 balance, open. Existing accounts maintain a credit history. The longer your credit history, especially with a good payment record, the better. Continue to pay down debt, but don”t close the accounts.

6.Don”t quit your job “” Stable employment history is important. It is best if you have been employed at the same job for at least 2 years. If you haven”t, you may still be able to qualify, but stay at your job if you can help it.

7.Pay your bills on time “” Avoid late payments as much as possible to avoid being denied a home loan or having to pay higher interest rates. Late payments reduce your credit score which has a direct impact on your mortgage.

Buying your first home is an exciting moment in your life. It is also a big decision. If you follow these tips, you can be more prepared to apply, get pre-approved and close your mortgage. Make sure you choose the right mortgage company that will work for you. If you can do all of these things, you”ll be a home owner in no time.