Top Tips For Getting A Mortgage
There’s no doubt about it, getting a mortgage can be one of the most stressful things that people go through in their lives. Getting a mortgage requires a lot of paperwork, time, patience, but it can be done more easily than you might think. Look for a mortgage agent and a real estate agent who can guide you through. Try these tips to make the loan process run smoothly and with less stress.
- Check your credit report for errors. You can get a free copy of your credit report once a year. Make sure you go through it thoroughly to make sure there are no errors, such as incorrect address, phone numbers, or accounts. If you do find errors, you can contact the credit bureaus directly and ask them to correct the errors.
- Buy what you can afford. Your debt to income, or DTI, is the number of monthly debt payments that you have compared to your monthly income. Mort mortgages will allow a maximum DTI of 41% and ideally, you want a DTI ratio of no higher than 36%. See how much house you can afford using MortgageCalculator.Org. Don’t stretch yourself too thin. If your DTI is too high, you’re more likely to have to miss mortgage payments if an emergency comes up.
- If you can afford 20% down you can avoid private mortgage insurance. Mortgages will require mortgage insurance if you have less than a 20% down payment. PMI is between 0.35% – 1 % annually, depending on the type of mortgage program that you choose. FHA loans PMI is 0.85% of the loan amount and is required for the life of the loan. Conventional mortgage PMI is 0.51% and is needed until the loan balance reaches 78% LTV.
- Contrary to popular belief, you don’t need perfect credit to qualify for a mortgage. A lot of mortgage programs do require a credit score of 620 or higher in order for you to qualify for a loan. FHA loans are available to people with credit scores as low as 580, however. Remember though, that just because you have a credit score of 580, that doesn’t mean that you will automatically qualify. Lenders will need to look at a lot more criteria than just your credit score. You will also need to have a reasonably clean credit history over the last twelve months, with no history of late payments or collections.
- You should try to improve your credit score before applying. Everyone applying for a mortgage should make sure that their credit score is as high as it possibly can be. If you have credit card balances, for example, aim to pay them below 15% of the credit limit. If you have negative account information, dispute it with the credit bureaus to get if off your report. Speak to your creditors and negotiate a pay for delete. If you have a friend or a family member who has a credit card in good standing, ask them to add you as an authorized user to improve your rating.