Buying your first house is exciting, but it is not without its stresses. Choosing your new home is nerve-wracking enough by itself. But things can get worse when you start looking for a lender who’s willing to finance your mortgage.
If this is your first time applying for a mortgage in Utah, the experts at citycreekmortgage.com says that it pays to do your homework to help ensure that you get approved for your very first home loan.
Check your credit.
Your credit report contains all your records for credit cards, loans, and even some utility bills for the last six years. Potential lenders will check your credit history to make sure you have the means to make monthly payments for the next several years.
Boost your credit score.
The higher your score, the better your chances of getting approved. But if your credit score doesn’t look that great, there are things you can do to push it up. Make sure you pay off all existing debts and close off credit accounts that are no longer in use.
Applying for a mortgage costs money. Many lenders require a 3.5% down payment on your loan, but there are also other expenses that you will have to shoulder upfront. Lenders expect borrowers to cough up cash for things such as home inspections, title searches, application fees, and the loan’s closing costs.
Stay away from debt.
Lowering your debt-to-income ratio increases your attractiveness to lenders. At the very least, your monthly debt payments should not amount to more than 36% of your monthly income if you want toget approved for a mortgage. Make timely monthly payments and avoid buying big-ticket items, such as a car, before applying for a home loan.
If your application is not approved, don’t feel discouraged. Ask the lender the reason for rejecting your application, and use this as leverage to help you improve your financial situation so you can apply again for a home loan with confidence.