A home is the most important – and most expensive – purchase many of us will ever make. Unless you’re independently wealthy, have a fortune in savings or earn a considerable amount of money, odds are you’ll be purchasing your home with the help of a mortgage.That being the case, it’s generally a good idea to have one’s financial affairs in order before proceeding to apply for a mortgage. The sooner you’re approved, the sooner you can make the jump from renter to homeowner. First-time homebuyers looking to increase their chances of approval can benefit from the following pointers.
Thoroughly Review Your Credit Report
Your first step on the quest to mortgage approval should be a thorough review of your credit report. By law, every American is entitled to one free credit check from Equifax, Experion and TransUnion, the country’s three largest credit rating agencies, per year. When reviewing your report, keep an eye out for any errors, out-of-date info and debts that have already been paid in full, as these stand to hurt your chances of approval. Anyone who aspires to one day own a home would do well to check their credit report once every six months. Since you can receive up to three free credit checks each year, this should prove neither difficult nor costly. (For best results, take care to space these checks out.)
Build up Your Credit Score
The higher your credit score, the better your chances of mortgage approval. As such, make a point of building up your credit score in advance of filling out loan applications. Improving one’s credit score generally entails making massive inroads into paying existing debt. So, if you’re currently sitting atop a mountain of outstanding debt, there’s no time like the present to start paying it off. Unsurprisingly, many mortgage lenders are unwilling to take chances on applicants who are saddled with debt. If these individuals can’t pay off the debts they already have, why should they be trusted to keep up with monthly mortgage payments? Garden State homebuyers exploring mortgage rates in NJ should set to work on improving their credit scores posthaste.
Avoid Making Large Purchases
Take care to avoid making large purchases before submitting your mortgage application and while said application is under review. The larger the purchase, the more it stands it add to your debt. So, if you’ve been thinking about getting a new car, upgrading your entertainment center or getting your hands on the latest gadget, make sure to postpone such purchases until after your loan has been approved. If you’re dealing with an emergency situation and a large purchase absolutely must be made, avoiding buying on credit.
Becoming a homeowner is among the most important trials of adulthood. Purchasing your first home is a clear indication of strong responsibility, financial securityand a willingness to commit. Since a good mortgage is crucial to the vast majority of home purchases, first-time buyers would be wise to organize their finances before they start submitting applications.