4 tips for getting a great mortgage deal
While you can’t change your complete financial position, there are several steps you can take to ensure a great loan package and fastest closing possible.
1. Maintain your credit profile
For several months before you start house hunting, keep your credit profile as stable as possible. Avoid big purchases that add to your debt and don’t open any new credit accounts (this includes bank credit cards, auto loans and retail store credit accounts). It’s important to keep your balances on all credit accounts within normal range to maintain a good credit score. If balances suddenly increase, it could affect your ability to qualify for the loan, or, at the least, raise the rate or fees related to the loan.
2. Improve your credit score, if necessary
The higher your credit score, the more attractive you are to lenders and the lower your mortgage rate will be. The lower mortgage rates go to those with scores above 760. In order to qualify for a mortgage, your score needs to be 500 or above (although lower scores may require higher down payments). If your score is on the low side, there are several things you can do to improve it prior to applying for a loan:
- Pay down or off credit accounts.
- Pay off past-due collection accounts.
- Review your credit report (find free options at Credit Karma and Credit Sesame ) and clean up any errors you see.
3. Organize your paperwork
We will be asking you for a range of financial records you’ll want to have easily accessible. Make sure you have the following paperwork collected and, if possible, scanned into pdf form to facilitate processing your loan: pay stubs and savings, checking and investment account statements for the past few months; W-s and tax returns for the past two years; cancelled rent checks or proof of payment; mortgage and property tax statements for every property you own.
4. Don’t move or spend your savings
Moving finances between accounts—such as from an investment account to a savings account—or cashing in investments in the months leading up to your mortgage approval can require additional and unexpected paperwork to explain where new deposits in an account came from. Unless you need to pay off large debts to improve your credit score, avoiding reducing your savings and investment account balances unless you still have plenty there to pay your down payment.
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