Buying a new home is an exciting time in your life and you need to work with a team you can trust. When you work with our team at Robus Mortgage, it’s like working with 20+ brokers at once.
We can handle all types of conventional loans and can show you how to qualify for a mortgage so you aren’t stressed out about the process. Use our experience to your advantage and let us help you with your qualification for a home loan. Continue reading this article to learn more about qualifying for a mortgage for your Salt Lake City home.
The 411 on How to Qualify for a Mortgage
Whether this is your first home or you’re looking to upgrade or downsize to a new house, it may have been a while since you had to qualify for a mortgage. Use these following tips to make the process simpler.
Know How Much How You Can Afford
Before you try to apply for a mortgage, you need to know how much house you can afford. If you have your expectations set properly, it will make it much easier for you to get the approval you want.
You can figure out the number for how much house you can afford by determining the income that you bring in per month as well as the income of a co-buyer, if applicable. You should include any alimony, investment income, and any other revenue streams.
Once you have your income down, determine how much your monthly housing costs are going to be and any other spending you do. Once you have that information, you only want the cost of your home to be at most 28% of your income.
Give Your Credit Health a Checkup
Before you try to apply for any mortgage, you should look at the state of your credit. If you don’t know what your credit score is or what items are on your credit, you should immediately pull your credit reports from the three major credit bureaus which are Equifax, Transunion, and Experian.
You can get a free annual credit report from each of these companies but you will have to pay if you want to see your credit score since they only give you the information on the report for free.
When you look at your credit health, you want to check for any derogatory items. If you’re in default on an account or if you have late payments, these are derogatory items that will affect your credit score. Make sure this information is accurate and if it isn’t, you can dispute the information on your credit report.
While you can dispute the information on your credit report, it can take some time to get these deleted off your credit report even if they are inaccurate. It is wise to start disputing these inaccuracies as soon as possible.
Save for a Downpayment
Many mortgages require at least 10% for a downpayment unless you’re going through a special program. If you want to avoid PMI (private mortgage insurance), you’ll need at least 20% down.
Improve Your Approval Odds
There are things you can do to improve your approval odds when it comes time to apply for your home loan. If you avoid applying for a home loan before you’re ready, it will keep you from racking up hard inquiries on your credit profile.
Lower Credit Card Utilization
Not only should you pay your credit cards down each month to save on paying for interest, but you should pay your credit cards down so you have low utilization. Credit card utilization means the percentage of your credit cards available credit that you are using.
If you have $1,000 available and you’re using $800 of it — that’s an 80% credit card utilization. You want to keep your credit card utilization down to 10% or below for the best positive impact on your credit.
Pay Your Bills on Time
There is no quick fix for paying your bills on time. You have to be consistent month in and month out and over time, you’ll begin to look like a responsible loan recipient.
Have Multiple Types of Loans With Positive History
Having a well-rounded loan portfolio with a positive history will make it easier for you to get your home loan. If you already have a home loan, you’ll have some history there but if you don’t have a home loan yet, think about holding a credit card, auto loan or personal loan to more positive history which can help when you apply for your loan.
Take Care of Any Derogatory Items on Your Credit Report
If you have late payments on your credit history, there isn’t much you can do about these. The best course of action is to continue paying your accounts early or on time. To keep from making these payments late, set up autopay so you don’t forget to pay on time and hurt your credit.
If you have accounts in collections, you need to pay them off so they show as paid off on your credit report. Most lenders don’t want to loan money to people that haven’t paid off their collections so this can be a major negative when you’re trying to get approved for a loan.
Ask About Approval Qualifications
Asking about what credit score will allow your approval for a certain mortgage rate will help you know what you’re shooting for as you keep a check on your credit. Continue to show yourself as a responsible borrower and you’re well on your way to being a homeowner.
Get Started With Your Home Mortgage
Now that you know how to qualify for a mortgage, let us continue to help you through the process. Our team of experts can work with you as you’re getting everything ready for your mortgage. If you have any questions, we can answer them quickly so you can get the mortgage you need.
Call our team today or go to our quote page and enter your information.