Looking for a home on Long Island? Getting pre-approval for a home loan should be a first step in the home search process. When applying for a home loan, these tips can help ensure that your loan application will be approved.
Check your credit score. Your credit score is used to assess how much of a financial risk you pose to the lender. The higher your credit score, the lower the risk that you will default on your mortgage payments. The first thing you should do is make sure that your credit report is accurate. Everyone can view his or her credit report once a year at no charge thanks to the Fair Credit Reporting Act (FCRA). Your free credit report can be ordered from www.annualcreditreport.com. There are no quick fixes to improving your credit score. Black marks from late payments or unpaid bills remain in your credit history for seven years. While you can’t change your credit history overnight, you can improve your credit score if you pay down any other loans.
Bring proof of income. Lenders will require you to document your income. You will need to show your W-2 forms from the previous year or the past three years of tax returns if you’re self-employed. You might need documentation for other assets as well.
Increase your down payment. Ask for less money by putting more money down. Doing so can improve the likelihood of the lender approving your loan. To avoid paying PMI (Private Mortgage Insurance) you will need to pay a minimum of 20% cash with a maximum mortgage of 80%.
Don’t mortgage more than you can afford. Enjoy your home. Don’t be a slave to it. Speak to a couple of mortgage brokers to discuss what you can afford and the best mortgage product for you. Rates are important – but so are the fees added on. Ask them to itemize any fees that will be charged.
With your Mortgage Pre-Approval in hand you are now ready to start the "Home-Buying Process". Not only will you feel confident about what you can afford, but when you find a home, your Realtor will convey to the seller that you have been pre-approved for a mortgage. Sellers consider Terms, as well as Price, when accepting an offer to purchase their home.