5 Things to do before getting a mortgage
1. Determine what you can afford
The amount of house you can afford is based on how much you can borrow from a lender and your available down payment. Several factors are calculated in, such as: annual income, debt, down payment, etc. Use this Affordability Calculator to find out what you can afford.
2. Find out your credit score
Get all three of your credit reports and all three of your FICO scores. The scores you buy need to come directly from the FICO website. It’s best to clear up any credit problems before you apply for a mortgage. Get your FREE credit reports from AnnualCreditReport.com. More information on Credit Reports.
3. Compare Lenders
When you begin looking for a mortgage you will encounter two types of lenders; mortgage brokers and direct lenders. A direct lender has the money to lend you and a mortgage broker acts as a middleman by going out and finding direct lenders who can give you the best deal. Determine the type of Mortgage that is right for you.
4. Gather the necessary paperwork
You will need paperwork verifying your income and assets, at least one month’s worth of pay stubs, copies of the last two years of federal tax returns, W-2s, checking and savings account documentation and a complete accounting of all debts and credit cards.
5. Get Pre-Qualified
A pre-qualification letter from a lender is just an estimate about how much you may be able to borrow based upon a limited amount of information. Instead of being pre-qualified, work with a lender to be pre-approved for a mortgage based on your actual financial standing before you start to shop for homes. Being pre-approved can streamline your shopping experience and improve your negotiations with sellers.
Really great information. Thanks!