Buying a home can be confusing, especially when it comes to the financing part. Where do start or what do you need to do? The first step is find out what kind of home you can afford by talking to a lender to see how much mortgage you can afford. This is called pre-qualification. It's a basic analysis of your general position as a borrower.
Getting pre-approved allows for a number of advantages when it comes to buying a homes. You'll notice that sellers will take you and your offer more seriously since you have a lender backing you up/. Not only that but you also help yourself with a little bit of piece of mind stability knowing you can afford this home with no worries. Here are a few easy to follow steps to help you get pre-approved for a home loan today:
The first place to begin is to find a lender or mortgage broker. I recommend asking your friends, family members, or your real estate broker for a referral or suggestion on who they used and if they would use them again.
You'll need to provide important information such as your gross monthly income and your total monthly payments. How much money do you pay out in bills like car payments, monthly payments on credit cards, and any other monthly payments you have.
The reason you are doing this is to find your all important ratios. The main one a lender looks at is the debt to income ration. This is difference you have left over every month when you compare your total income to the amount of total expenses you pay out. The lower the number, obviously the better it is for you. You would really like for your debt to income ration to be 36% or lower in order to be approved for the best interest rates.
Your next big step is let your lender pull your credit report. This is a credit scoring system used by banks and lenders to see if you are a good loan candidate. Make sure the report your lender uses has a FICO score. Ultimately, you would like a score of 680 or higher. This is considered an excellent score or an "A+" rating.
A credit score calculates the risk of lending to you based on several factors. Some of these factors are how your occupation and how long you've been employed there, how long you've lived at your current address, the ratio of balances to your credit lines. They also look at if you're a home owner, the number of credit lines open under your name and the amount of recent inquires into it. You age is a factor along with anything negative such as bankruptcy, collections against you, foreclosures and slow pays.
Now, you've made it to your final steps. All you have left is your lender preparing a letter of pre-qualification for you. It needs to show your initial financial and credit information has been reviewed and looks good. The letter is not a guarantee of a loan and should properly mention that as well.
With literally hundreds of credit cards at your disposable, choosing the one that's right for your lifestyle can be a daunting task. You always want to ensure you get a credit card that meets your needs while offering the best rates and the biggest rewards. You can search dozens of local banks and lending institutions, scour the internet, or randomly select a credit card OR you can use our convenient online credit card comparison tool to find exactly the card that's best for you. Our credit card comparison tool will allow you to view credit card details side-by-side in an easy to understand cross grid. You can even select a card and approve online, in some cases being approved within minutes of submission! It truly is the smart way to shop for credit cards!
Print this page