Whether you’re a first-time homebuyer or selling and moving, the mortgage process can be confusing. Get off to a good start by taking time to prepare for the first step: the application.
Follow these guidelines and get ready to take out a mortgage that fits your lifestyle and your budget.
When it comes to your mortgage application, lenders will look at your financial stability as one determining factor. In general, you should work to avoid big changes that would cause a financial shift in your life. Keep your job, don't change banks, and don’t move. Report any unexpected changes in your life to your loan representative as soon as possible. Stay on track with bills in your name and make on-time payments. Another way to show stability? Don't charge excessively or max-out credit cards, and don’t plan to open new credit cards. Depending on your credit rating, this may not pose a big risk in the process, but it's smart to hold off on anything that may include a credit inquiry unrelated to your mortgage.
Tell the truth
This may seem like a silly tip, but there’s no point in hiding any financial transgressions on your loan application. Be as thorough and honest as you can be. An in-depth analysis of your financial history will take place during the loan process. That means failing to report any debt or misrepresenting your income will raise red flags.
Plan for future expenses
Data from Experian says that new homeowners buy more products and services in the first six months after moving than established residents spend in two years. That means you should establish a good savings routine in preparation for new expenses. Consider using a budget tool to help make room for savings.