Preparation
To avoid being turned down for a mortgage, you should check your credit report several months before you apply. Many mistakes are overlooked, but if you can get your credit report accurate, it can raise your credit score a few points. A thorough check of your credit report is important, and you can obtain your credit report for free from each of the three major bureaus.
Credit Score
Your credit score can play a big role in getting a mortgage. It shows lenders how reliable you are with paying your debt. The higher your score, the better your mortgage terms will be. Your payment history accounts for 35% of your total score, so if you have missed payments or have a poor payment history, lenders may hesitate to lend you money.
Your credit report includes a list of all of your current debts and your payment history. It can also show whether you’ve ever had accounts referred to collections. It can also show whether you’ve had any recent bankruptcies or tax liens. It also shows the number of inquiries you’ve made to various lenders.
Shop Around
Shopping around for a mortgage is an important step in purchasing a home. Not only can it help you save money, but it also gives you a better idea of what to look for. By comparing mortgages from several lenders, you’ll be able to get a better rate, a lower payment, and a better mortgage experience. You should also consider the communication and customer service of each lender when you compare offers.
Debt-To-Income Ratio
Your debt-to-income ratio (DTI) is a number used by lenders to determine whether or not you can afford a mortgage. This number is usually expressed as a percentage, and it shows how much of your income is going to debt each month. The lower your DTI, the more likely it is that you will be able to pay off your mortgage in full and on time.
