Step 1:
Lenders and financial experts recommend that your monthly debts should be no more than 36% of your monthly income. (For a more conservative estimate,this should be based on your take home pay instead of your gross pay.)
If you have additional outstanding debts such as student loans or credit cards,you will need to factor in those monthly payments into your total monthly debt payment. An online mortgage calculator (there's one available on the homepage) can help you determine your borrowing power at current mortgage rates based on your income and your current outstanding debt,and will likely be the best tool for you to make this initial estimate.
Step2:
Take a close look at your credit report.
Your credit history is one of the principal measures used by a lender to determine your interest rate.The better your credit, the better lending terms your bank or lending institution will be able should be looking.
You should be aware of what information is on your credit report by obtaining and reviewing copies of your credit report from the three main credit report agencies.
Equifax | www.equifax.com | 1-888-766-0008
TransUnion | www.transunion.com | 1-800-888-4213
Experian | www.experian.com | 1-888-397-3742
What Not To Do
If at all possible, you should avoid making a major purchase or changing your job if you're seriously considering buying a home in the next few months. This may negatively affect your credit score. Take a look at the video library for more tips on what not to do.
Remember that there are several factors that affect your credit report including your payment history, your current ratio of debt to income and signs of responsibility and stability. And since not all creditors report to all three agencies, it's best to order a report from all three institutions. Your goal in ordering all three credit reports is to make sure that all of the information stated on each report is accurate and correct.
If there are any discrepancies on your credit report, it's important that you contact the rating agencies and have those records corrected.This will help you avoid hassles later on.
Step 3:
Gather the documents / Take a look at your assets and monthly expenses.
Your credit history is one of the principal measures used by a lender to determine your interest rate. The better your credit, the better lending terms your bank or lending institution will be able should be looking.
You should be aware of what information is on your credit report by obtaining and reviewing copies of your credit report from the three main credit report agencies.
These documents, in addition to your credit report, will help establish with the lender your debt to income ratio and your ability as a borrower to repay debts:
Social Security Number
W2 Forms from the previous two years Pay Stubs (most recent months)
Employment History Summary
Bank Statements (3 months)
Creditor Information
- Student Loans
- Auto Loans
- Credit Cards
- Child Support Payments
Federal Tax Returns (2 Years)
Complete Record of Assets
- Stocks, bonds, investment accounts
- IRA / Retirement plan
- Life insurance plan
- Automobiles Owned
- Construction loan
- Gift letters
- Documentation of other income
Improving any of these areas will help you qualify for better lending terms, so keep that in mind could receive may save you thousands of dollars over the life of your mortgage.
Step 4:
Talk to a qualified Lender.
After looking at this information for yourself, it's time to speak to a qualified lender. A professional advisor will not only be able to give you information on the best rates and terms available in the current market,but he or she can also explain to you what options you have given your
There are a considerable number of choices available to consumers and I advise you to learn as begin to look seriously at homes, you'll go back to the lender and shop around for the best loan available.
If you have any questions about who to talk to, to obtain a mortgage, give us a call! We can direct you to our preferred lendors and get the home buying process started.
