If you plan on applying for a home mortgage soon, you may have some concerns about your ability to qualify for one with a low rate and the best repayment terms. Luckily, there are several steps you can take before you apply to improve the process, as well as the quality of the mortgage loans you may be offered.
Obtain and verify your credit report
Instead of merely checking an app for your three-digit credit score, take the time to obtain and verify a complete copy of your credit report from all three of the national credit bureaus - Transunion, Equifax, and Experian. This is important because even seemingly small issues like a late payment can be a problem when under scrutiny for a mortgage.
Federal law mandates that consumers may request a free copy of their credit report online or by phone from each credit bureau on an annual basis. Taking the time to study each report, verify the entries, and correct any errors will help strengthen your loan application process.
Make sure that your bank accounts reflect healthy activity
When you apply for a mortgage, the lender or mortgage broker will require you to submit your checking and savings account statements, usually for the previous 60 days. Instances of careless money management, such as an overdraft, can have a negative influence on your home loan approval process.
Lenders and mortgage brokers are looking for other information too when reviewing an applicants banking records. Most want to verify that there are adequate sourced and seasoned funds in the accounts to cover the amount of the applicant's down payment and closing costs, and most will also want to see regular deposits and good money management skills.
Understand the need to maintain stable employment
Part of the mortgage approval process involves the verification of each applicant's employment. In addition to making sure that the income is sufficient to cover the monthly premium payments and interest for the loan you have applied for, the lender will want to the reassurance that the employment status is stable. Making any changes during the application process, even if it is a lateral or upward career move, can derail the entire application process.
Consider shopping around for your loan
Another thing home loan applicants can do to help them get the best possible home loan is to seek out and compare the loans available to you from both your lender and a reputable mortgage broker.