There’s a lot more to mortgage qualification than just steady income and sufficient funds. While the journey to mortgage qualification may seem overwhelming, there are plenty of steps you can take to improve your chances of qualification and better rates. Here are a few things to keep in mind as you prepare for your home buying journey.
Build Strong Credit
As you’ve heard, “credit is king” when it comes to getting a great mortgage rate. A low credit score can keep you from buying a home or from qualifying for an affordable mortgage rate. Fortunately, there are clear steps you can take to improve your credit score.
- Request your free credit score. It’s important to be informed as you begin this process. You can request your free credit report at AnnualCreditReport.com. You might be surprised at the results! Look for inaccuracies and get those taken care of right away.
- Pay off past-due bills. Take strides to pay every bill on time and reduce the balances on your credit limit on your accounts.
- Establish steady credit accounts. Limit yourself to three to five credit accounts such as a car payment, gas card or student loan. Accounts with histories of one year or longer are best. Remember, keep the balances as low as possible and pay the bills on time.
Start practicing paying your mortgage payments now! Set aside savings each month in anticipation for the mortgage payments you will have in the future. Lenders appreciate seeing that you have a pattern of savings, and you will be able to use these savings towards your down payment when it comes time to purchase your first home.
An important factor in loan approval is debt-to-income ratio, which compares minimum monthly payments on all debt to gross monthly income. Debts can include credit card payments, car loan payments, child support payments, legal judgments and other recurring debt payments, so be sure to reduce your balances as much as possible.
Don’t be afraid to visit open houses, even if you are not fully prepared to purchase a home within the next two years.
By viewing homes for sale in your price range, you’ll gain a better understanding of home value. It’s even worth a few minutes of your time to see if you currently qualify for a mortgage. To see if you prequalify for a loan, just follow this link. As always, I am available for any questions you may have about mortgage qualification. Feel free to contact me for recommendations of fantastic realtors in the Kansas City area so you can start your home buying journey with the best professionals in the city.