Some of the most common milestones in people’s’ lives include getting married, having children, and buying a home. Buying a home is a huge decision and one of the largest investments that you will most likely make. Unless you live alone, you don’t just take your personal needs into consideration but you take the needs of your family into consideration as well. A significant amount of time goes into the process of buying a home, from obtaining a mortgage to finding a home to moving into your new home. The best way to approach homeownership is to be as financially prepared as possible. Here are some tips to prepare you for a mortgage application:
Pay Off As Much Debt As You Can
Before you even begin applying for loans, you need to keep your debt-to-income ratio as low as possible. Credit card debt, student loan debt, and car payments can significantly affect your mortgage rates. If your total debt combined with your mortgage payments are greater than your income, you may not even be able to receive a loan in the first place. This is why it’s important to pay off as much debt as possible, even if that means that you will have to wait longer to apply for a mortgage than you originally thought. In the long run, waiting could pay off because it could lower your mortgage rates.
Pay Your Bills Promptly And On Time
Look, we’re all guilty of forgetting to pay a utility bill on time due to holidays or other circumstances. However, these habits could come back to haunt you if you decide to apply for a mortgage. If you are forgetful, you might benefit from setting up automatic payments so that they will always occur on time.
Stay Put In Your Job
For most applications, you need to have worked in the same place for at least two years in order to receive a mortgage. However, you could be exempt from this rule if you recently completed graduate school or obtained an outstanding job. If you have a habit of bouncing from job to job on a regular basis, you may not be eligible for a mortgage.
Abstain From Buying On Credit
Make sure that you do not buy anything on credit or even apply for any lines of credit while your mortgage is impending. Buying on credit could put your impending mortgage at risk, so refrain from buying on credit in the meantime.
What About Self Employed Individuals?
Small business owners might have to wait for up to two years before they can qualify for a mortgage. Our mortgage advisors in Scottsdale recommend that any self-employed individuals write off all expenses strategically on taxes. This could make your gross adjusted income lower than your actual income. In cases such as these, the mortgage lender considers the lower amount to be your income.
Once you’ve properly prepared yourself, contact Scout Mortgage to find the best mortgage rate for your lifestyle. Our mortgage brokers are happy to find you the lowest rates available without closing costs.