If you think you are ready to purchase a new home, there are several steps you should take before you start your house search. It is important that you get your finances organized. Not only do you need to organize your finances so you can determine how much you can afford, you will also need to provide the mortgage lender with specific information that will be used to determine whether or not you qualify for a loan and what terms and rates you will receive.
Check into Your Credit
Taking a look at your credit report is the first step you should take toward organizing your finances You are entitled to a free credit report once per year and you can get it by going to www.annualcreditreport.com. This is the best place to go for your free credit report because there are no strings attached.
Once you obtain your free credit report, look through it in order to make sure all of the information is accurate.
If you find that anything is incorrect, get in touch with the credit reporting bureau and let them know about the error. Then, wait until the problems have been determined before you start the process of applying for a mortgage loan.
Gather Your Paperwork
Once you have made sure your credit report is looking as good as possible, you need to start gathering paperwork to share with the mortgage lender. The documents you should gather includes:
Income tax returns for the past three years Bank statements from the past three months Copies of your current pay stubs and records of any additional income you may have Receipt of credit issues that have been resolved Copies of bankruptcy or divorce settlements
These details will assist the mortgage lender to know more about your financial situation. You need to be certain to bring in as much documentation as possible to demonstrate that you are on track and doing better where your finances are concerned in case you do have some red marks on your credit history.
Pay Your Debts and Save Up
If you are encumbered with a huge amount of debt, you should take steps to fix that issue prior to applying for a mortgage loan. Even small debts should be paid off if possible.
Apart from this, you should avoid acquiring new debt. The less debt you have when applying for a mortgage loan, the better chance you will have of being approved.
The assets you have will also play a role in determining whether or not you are approved for a loan.
Areas the mortgage lender will consider include:
Your savings account Any investments you have, including bonds, stocks, and mutual funds The cash value of your insurance policies Monetary gifts provided by family members Your monthly salary
Though it is possible to get a mortgage loan with a not-so-good credit history and with little money in savings, you will receive better terms and a better interest rate if you take these steps prior to applying for a loan.
Check into Your Credit
Taking a look at your credit report is the first step you should take toward organizing your finances You are entitled to a free credit report once per year and you can get it by going to www.annualcreditreport.com. This is the best place to go for your free credit report because there are no strings attached.
Once you obtain your free credit report, look through it in order to make sure all of the information is accurate.
If you find that anything is incorrect, get in touch with the credit reporting bureau and let them know about the error. Then, wait until the problems have been determined before you start the process of applying for a mortgage loan.
Gather Your Paperwork
Once you have made sure your credit report is looking as good as possible, you need to start gathering paperwork to share with the mortgage lender. The documents you should gather includes:
Income tax returns for the past three years Bank statements from the past three months Copies of your current pay stubs and records of any additional income you may have Receipt of credit issues that have been resolved Copies of bankruptcy or divorce settlements
These details will assist the mortgage lender to know more about your financial situation. You need to be certain to bring in as much documentation as possible to demonstrate that you are on track and doing better where your finances are concerned in case you do have some red marks on your credit history.
Pay Your Debts and Save Up
If you are encumbered with a huge amount of debt, you should take steps to fix that issue prior to applying for a mortgage loan. Even small debts should be paid off if possible.
Apart from this, you should avoid acquiring new debt. The less debt you have when applying for a mortgage loan, the better chance you will have of being approved.
The assets you have will also play a role in determining whether or not you are approved for a loan.
Areas the mortgage lender will consider include:
Your savings account Any investments you have, including bonds, stocks, and mutual funds The cash value of your insurance policies Monetary gifts provided by family members Your monthly salary
Though it is possible to get a mortgage loan with a not-so-good credit history and with little money in savings, you will receive better terms and a better interest rate if you take these steps prior to applying for a loan.
About the Author:
Jim Olenbush is a Texas real estate broker that has been actively selling Austin real estate listings for over 12 years. His team of experienced Realtors specialize in West Austin and other luxury neighborhoods around Austin, Texas.
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