Buying a home is a major buying decision, making it a nerve-wracking experience for first-time homeowners. Research is crucial prior to buying a home as this will help you in making the right smoother and with lesser worries.
- Make sure to check your credit score
Banks, credit unions, and mortgage lenders look at an applicant’s credit score before approval. It is considered as a major determinant whether an application for a mortgage is approved or rejected.
Having an excellent credit score is just one part of the equation. Lenders have set higher standards in recent years when looking at the credit standings of their applicants and prospective clients. Lenders are now more concerned of an applicant’s utilization rate. This pertains to the frequency a borrower utilizes his line of credit in the purchase of goods and services. Those who have low utilization rate are most likely to be approved of a loan with more affordable interest rates.
If you credit score is not that good, you may want to slow down on using your line of credit for purchase in the next 6 months. This will allow for your credit score to improve. Once you apply for a loan (phoenix home loans for example), you have higher chances of getting approved and being assessed of lower interest rates.
- Prepare your documents
Individuals who are planning to apply for mortgage should prepare before they start processing their applications. If you are, then you must prepare complete documentation of income and taxes. Majority of lenders will ask for recent pay stubs, and form W-2s in the past two years, income tax returns, and your bank statements in the past two months.
These documents and paperwork are just the tip of the iceberg. Some lenders may request for additional financial documents before they can approve for your eligibility. Nevertheless, make sure to have everything prepared on time so you can get approved sooner than later too!