Close
Get a Mortgage

How to Get a Mortgage through 7 Easy Steps

Purchasing a house is perhaps the most interesting thing you’ll do in your life. It’s additionally the costliest. Except if you have a pool loaded with cash, you’ll have to take out a home loan to assist with financing the acquisition of a home. A house is among the greatest cash moves you’ll at any point make – and with 88% of homebuyers financing their buys, chances are you’ll require a home loan. Applying for a mortgage can be nerveracking, especially if it’s your first time. The good news is that by following these seven steps, you can set yourself up for success.

1. Examine Your Credit Reports

Before you get too far into the mortgage application process, take a step back and review your credit reports. The state of your credit will play a significant role in obtaining a good interest rate on a home loan, or even getting approved at all.

 

Go through your reports to make sure there are no errors or accounts listed that aren’t yours that may have harmed your credit. For example, double-check the accuracy of your personal information, such as your name, address, and Social Security number. Additionally, ensure that the credit accounts and loans listed on your reports have been properly reported, including the balance and status. Check to see if any strange accounts have been opened, which could indicate identity theft.

 

If you discover an error, you can file a complaint with the bureau that is reporting the incorrect data by visiting its website. When you file a complaint, the bureau has 30 days to investigate and respond.

 

You should also keep an eye out for negative items on your credit report that are accurate but may harm your credit score. Delinquent payments, accounts in collections, bankruptcy, liens, and too many credit inquiries are examples of these. Though you cannot dispute factual entries, you can work to correct them prior to applying for a mortgage.

2. Enhance Your Credit Score
This leads us to the next step. Unless your credit is in perfect condition (in which case, congratulations), you’ll want to spend some time cleaning it up.

 

Most conventional lenders consider 620 to 640 to be the minimum credit score required for a mortgage. Some government-backed loans will allow you to borrow with as little as a 500 credit score if you meet certain other requirements. The higher your credit score, however, the more affordable your loan will most likely be.

 

Making all of your debt payments on time and in full is one of the best ways to improve your credit score. Payment history accounts for 35% of your credit score, making it the most heavily weighted factor. Another 30% of your credit score is determined by the amount of debt you owe in relation to the total amount of credit extended to you, so it’s best to keep your debt as low as possible.

 

Finally, for a few months before applying for a mortgage, avoid making any major purchases on credit or opening new lines of credit, as this can have a negative impact on the average length of your credit history and the number of hard inquiries.

3. Determine How Much House You Can Afford
Before you start looking for your dream home, make sure you can afford it. Using the 28/36 rule, calculate how much house you can afford to buy. This is your debt-toincome ratio, or the percentage of your gross monthly income that is dedicated to debt repayment each month. A DTI of 50%, for example, means that you spend half of your monthly pre-tax income on debt repayment.

4. Determine the Type of Loan You Desire
You’ll need to weigh your options to determine which type of mortgage loan is best for you. Here are a few things to keep in mind:

 

Fixed vs. variable interest rate: An important consideration is deciding whether to have a fixed interest rate for the entire term of your loan or one that can fluctuate. Fixed-rate loans are generally a safe bet because you know exactly how much your monthly mortgage payment will be. Variable rates are typically less expensive in the first few years of a loan.

However, the rate will reset one or more times during the loan term based on market conditions. That means your interest rate may rise in the future, making your mortgage payments unaffordable.

 

Conventional vs. government-backed: Mortgage loans are classified into two types. The first type of mortgage is a conventional mortgage, which is provided by a private bank, credit union, or online lender. These loans typically have more stringent eligibility requirements and require larger down payments.

If your credit isn’t in great shape and/or you haven’t saved much for a down payment, you may still be able to purchase a home using a government-backed mortgage. These loans are still obtained from private lenders, but the funds are guaranteed by the federal government. This reduces the risk of these loans to the banks that provide them, allowing you to secure more flexible terms.

 

Shorter vs. longer term: Finally, think about how the length of your loan affects the cost. On the one hand, a 15- or 20-year loan allows you to pay off your loan faster and save money on interest charges. However, this means that your monthly payments will be significantly higher, stifling some of your cash flow. In fact, in this case, you may need to borrow a smaller amount.

You could, on the other hand, extend the loan term to 30 years or longer. This would make your monthly payments more manageable and even allow you to borrow more money. However, increasing the number of years you spend repaying the loan increases the amount of interest paid over time.

5. Get Your Paperwork Done
Your finances are in good order, and you know how much money you can borrow. Now comes the hard part. Lenders require a lot of documentation as part of the mortgage approval process, so make sure you have everything ready before you apply.

 

What you’ll need is as follows:
a) Income proof
b) Asset verification
c) Liabilities list
d) Additional documents

6. Look for the Lowest Mortgage Rates
Now, it’s time to apply for a loan. But don’t let your excitement lead you to sign a contract too quickly. To ensure you’re getting the best deal, you’ll need to do some research and be patient when selecting the right mortgage lender and loan offer. You can give me a chance to do it for you. I can provide you the lowest rate mortgage possible.

 

The mortgage interest rate you choose will have a significant impact on the overall cost of your loan. Over many years, even a fraction of a percentage point can add up to a significant amount of change.

 

Aside from the interest rate, consider closing costs, origination fees, mortgage insurance, discount points, and other costs that can add thousands of dollars to your loan. These fees are frequently rolled into your loan balance, which means you must pay interest on them in addition to the principal.

 

7. Consider Obtaining Preapproval
When you get preapproved, a lender will look at personal details like your credit score, income, and assets to determine how much you can borrow. This gives you a competitive advantage because home sellers know there’s a good chance you’ll be able to secure financing quickly. Furthermore, rather than deciding on a home and then biting your nails as your mortgage application is reviewed, you can begin house hunting with a more specific price in mind.

It should be noted that being preapproved does not imply that you will have the funds in hand when the time comes to buy. Before receiving the official OK, you must still submit an official mortgage application and go through the entire underwriting process.

About Me: Kapil The Mortgage Agent
In negotiations, I’ll represent you. When it comes to discussing mortgages with their bank, many customers are unsure or uneasy. Even if you have an existing relationship with your branch, I can use that relationship to your advantage when negotiating your mortgage, ensuring that you get the best rates and terms possible. Call me right now for a free, noobligation consultation. Call +1 (431) 999-8485 or Apply now!