You want to buy a house, but you don’t have enough money to make the purchase. Your situation is common among potential home buyers. Luckily, banks and mortgage companies offer mortgages to help people get into a home. These loans can cover the cost of the house and any other dues necessary in the purchase. However, there are qualifications you need to meet before you earn a loan.
Before you search for houses, it’s a good idea to determine your current financial standing so you know what loans are available to you. It is also a good idea to try and improve your chances by getting pre-qualified for a mortgage. With a pre-qualification, you may have better odds convincing a seller to sell you their home.
A Quick Guide on Tips to Pre-Qualify for a Mortgage
1 – Check Your Credit Score
In order to have a great shot at being pre-qualified for a loan, you’ll want to do everything you can to increase your chances of getting pre-qualified for a loan. One of the first things you’ll want to work on is your credit score. Paying your bills on time and avoiding taking on more debt will help you improve your FICO score.
2 – Know Your Debt-to-Income Ratio
Another important thing to know is your debt-to-income ratio. This is the ratio of your gross monthly income to your monthly debt. The higher your ratio, the more debt you have. This could make it a challenge to get a loan, so you may need to continue repaying your debts for a few
years before even considering a mortgage and homeownership.
3 – Know How Much You Can Afford to Pay
Before you apply for a loan, it’s vital to know how much you can afford. There are many factors that go into determining how much you can afford a home loan. Start with your budget, and then figure out what you can comfortably afford. Ideally, there should still be money in your account after your down payment and expenses.
4 – Shop Around with Different Lenders
Once you know what type of loan you can afford, it’s time to start shopping around for a lender. This will give you a better idea of how much you can afford, and you’ll have a better idea of what you want out of a house.
By getting pre-qualified, you can determine what interest rates are available according to your current financial standing and get a better idea of what you can afford. This will make it easier to find the right house and avoid overspending.
Now that you have learned more about getting pre-qualified, you can start looking at houses. Before you start looking at houses, you should get pre-qualified.
In the meantime, you can improve your chances at better deals by increasing your credit score and improving your current financial standing. Shopping around with different lenders will help you get a better understanding of what you can afford.
If you are looking for a homebuyer mortgage, visit Cross Timbers Mortgage. We help our customers find the right mortgage for their specific financial goals.