Mortgages are loan products that are specifically used to purchase real estate. You can get them through your local bank, a credit union, or a mortgage broker. Each has its own reasons you may choose to get a mortgage from them including their qualifications process and interest rates. However, all financial institutions use the same criteria when approving or denying your loan application. So, here are some tips to improve your chances of getting pre-approved for a mortgage:
• Maintain Credit Score: Your credit score is a factor that most people think of when they need to qualify for a mortgage. You should at least have a 640 to qualify, but the higher the better.
• Pay Down Debt: The more debt you have, the less likely a lender will approve you for a mortgage. Long-term debt such as student loans isn’t a big concern, but credit card debt and personal loans they like to see be at a minimum.
• Calculate Debt-to-Income Ratio: Your debt-to-income ratio is the percentage of your gross monthly income that goes towards debt payments such as credit cards, rent, student loans, and car payments. Lenders generally prefer a ratio of 36% or less, including your potential mortgage payment.
• Gather Income, Financial, and Personal Information: Your mortgage officer will need your social security number, employment information, address, investments, and proof of income. They may also require a few years of tax returns as part of your income verification.
At Hunter Ranch & Realty, we help home buyers find their dream homes in the Abilene, TX area. The home-buying process is complicated, but the first thing you should do is get pre-approved for a mortgage. It can be difficult to qualify for a mortgage that fits your expectations. So, follow the tips above for maximizing the chances of getting pre-approved. Contact us today to begin your home-buying journey!