The Dos and Don’ts of Applying for Mortgages
Buying a house can be stressful, especially if you’re new to the process. It’s important to have clear expectations about what’s involved in applying for and closing on a mortgage. In this article, we’ll cover some of the dos and don’ts of applying for mortgages so that you can have the best experience possible.
DO Work on Your Credit Score
- Work on your credit score. Ask for a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion). Look for errors and dispute them immediately by contacting the credit bureau directly. If you’re able to fix any errors, it will help improve your score.
- Settle any debts. Paying off credit card balances will help build up your score and help avoid charges or late fees.
- Don’t close your cards! Open lines of credit that don’t carry a balance are good. Don’t close them, especially if they have been open for a while.
DON’T Buy a New Car
It’s tempting to upgrade everything when planning to move into a new home. Cars aren’t the only thing on the list—don’t purchase appliances either. Making any major purchases while you are home-buying can affect your loan eligibility.
DO Know What You Can Afford
You might not realize it, but a mortgage is one of the most important purchases you’ll ever make. This is especially true for first-time homebuyers who need to know how much they can afford. If you don’t know your financial situation and where your finances stand, how will you know if buying a house is right for you?
Talk to a professional to determine how much house payments and property taxes will cost each month. You should be honest with the lender about your finances. Your goal is to ensure they get a clear picture of what type of borrower you are and what homes you should consider.
DON’T Change Jobs During the Loan Process
One major thing on our list of dos and don’ts of mortgage applications is one many people unfortunately forget. You should try to get a mortgage loan before you leave your current job.
If you change jobs, it may take time for the new employer’s HR department to verify employment and pay stubs. Additionally, work history plays a factor in lending decisions; if your new job is in a new field, it could render you ineligible.
Fund Your Dream Home
The tips above will help you navigate the mortgage application process more smoothly. If you have any other questions about applying for a mortgage, feel free to speak with a credit union mortgage loan specialist who would be happy to help.