Buying your first home requires plenty of planning. If you have good credit, chances are you aren't too worried about the mortgage process. Unfortunately, there can be a myriad of small issues that you are unaware of that could impact your mortgage. The impact can be minor, such as needing to provide more paperwork, to severe, such as having to deal with a denial or a higher than expected interest rate. You can ensure there are no unexpected surprises by planning for your mortgage paperwork at least three months in advance of the beginning of your home shopping plans. The following tips will show you how.
#1: Pull your credit report
You can pull your own credit report without any penalties, and you can do so up to twice annually at no charge. You will want to pull your report from all three credit reporting agencies at least 90 days before you plan to apply for a mortgage. Make sure all the information on the credit report is up to date and accurate, including employment history and current and past address information. If any of this information is at odds with what you tell the mortgage company, then you may have to provide additional paperwork.
Next, check the debts, liens, and payment history section of your credit report. Any inaccuracies here, especially if they show slow, late, or no payments must be addressed before you apply for a mortgage. You can contact the reporting company directly, but often it is easier to dispute the information via the reporting agency. Be prepared to send in paperwork showing that the information is wrong, such as canceled checks or old statements that show on-time payments or a payoff. If the information is accurate, don't despair. Just be prepared to write a letter of explanation to the mortgage lending company.
#2: Apply for preapproval
Once you are ready to start shopping, apply for a mortgage preapproval. This piece of paper shows the amount of a mortgage you can expect to receive, as well as a projected interest rate. If you suspect that interest rates may rise before you make your purchase, you may even be able to request to have your interest rate locked in so you can avoid the raising rates.
Generally, a preapproval expires after three months. It is also contingent upon nothing showing up during the final underwriting process that contradicts your financial and credit status at the time of preapproval. What this means is that you don't want to go out and buy a new car on credit or charge up your credit cards, since this type of spending can have a huge impact on your credit report and result in your preapproval being modified or revoked.
For more help, contact a mortgage lender in your area.
When I started my own company, I knew that I needed a little business capital and fast. In an effort to raise money, I worked with various lenders to discuss loans, financing, and special terms. Unfortunately, I quickly discovered that not every loan was created equally. Some loans had almost predatory terms like high interest rates and penalties, while others were completely fair. Fortunately, a business consultant of mine taught me about loans and financing, so that I could make better choices in the future. The information on this blog saved my business, and I know that it can help yours too.