Although, owning a home – of – one’s own, is often, considered, an essential component, of the so – called, American dream, unless/ until, someone, prepares, effectively, and has the financial necessities of affording to do so, this dream, is quite challenging to achieve! The vast majority of Americans, especially, first – time, home buyers, must utilize a mortgage, as a key part of being able to afford, to buy, one of the stumbling blocks is often, preparing, in advance, to do, everything needed and necessary, to qualify, for the best possible financing options. With that in mind, this article will attempt to briefly review, examine, consider, and discuss, 6 major considerations/ actions, for qualifying for a mortgage.
1. Overall Credit Rating, and Score: The higher one’s credit rating, and score, the better, the chance of securing the best possible form of financing. Wise home shoppers, begin the process, at least six months, before they start their hunt/ search, and secure a copy of this report, from the major bureaus. Do so yourself, or if, needed, use a professional’s help and guidance. Correct errors, fix them, and begin reducing your debt. In this period, avoid taking out, and/ or using any additional debt!
2. Total verifiable income: How much income (verified), can you show, and prove? Know how much mortgage, you qualify for, by discussing it, well, in advance, with a Mortgage Professional!
3. Debt, other than mortgage debt: Lending institutions, use a formula, which factors in your overall debt, and your mortgage loan, will be impacted, by this percentage. It is a wise idea, to begin paying – down, the balances on your credit cards, and other personal loans, etc.
4. Combined/ total debt: In addition to the formula for overall debt, there is another percentage, lenders use, to guide them, to the maximum amount of mortgage, they will offer. This is based on a percentage of your monthly income, related to the mortgage installment. An educated consumer, is best prepared!
5. Know how much you qualify for: After correcting issues, paying – down debts, etc, have a confidential discussion, with a mortgage professional. Begin your search, by knowing how much, you will qualify for, so you don’t waste a lot of time and energy, looking at houses, you can’t afford!
6. Appraisal value: The next step, is to realize, the house, you are seeking, and want to purchase, must Comp – out! This means, it must appraise, at what you are paying for it, because the bank will only loan, an amount based on their appraised value!