6 Tips for Getting a Mortgage

Potential homebuyers often hear mortgage lending standards are so tight these days that it’s next to impossible to qualify for a mortgage without perfect credit. But that’s hardly the case. If you’re willing to commit to living by a few good-practice guidelines, in the long run, you’ll stand a much better chance of landing the home you’ve always wanted! Here’s how.

1. Start Saving!
Start saving for a down payment and closing costs as soon as possible. Down payments can range from 3.5-20%. For example, a home at $200,000 at 3.5% will require a $7,000 down payment plus closing costs.

2. Keep a paper trail.
Make sure you have all the records to properly document your finances. This inclues tax returns, bank statements, W-2’s, investment accounts, and other assets. Also, be sure any cash gifts are documented.

3. Protect your credit.
Your credit score will determine if you get a home loan and what the rates and closing costs will be. Be sure to monitor your credit so there are no surprises.

4. Know how much you can afford.
Before you go house hunting, make sure you know you can afford the homes you are looking at. Lenders will look at your debt-to-income ratio. Try to keep it below 43%, including all debts, mortgages, and property taxes.

5. Get pre-qualified.
Many real estate brokers will want to make sure you can buy a home before showing you any. Getting pre-qualified also means you know how much you can get a loan for and are ready to move on an offer when you find the right home. You really need to get a Letter of Pre-Approval.

6. Don’t Spend.
Once you’re pre-qualified, it’s important not to make any changes to your financial situation. Don’t open or close any credit cards or lines of credit. Don’t purchase anything new — no cars or furniture.

If you think you missed out on lower rates, think again. Rates are still affordable and when you compare them to the 18.45% in October of 1981, they seem like a steal!

If you have any questions about mortgages or selling or buying a home in metro Albuquerque, be sure to contact me today!