How to Apply For a Mortgage

No matter if this is your first home or not, applying for a mortgage is an essential step in the process. You’ll need to fill out paperwork, provide your credit report and verify all financial documents so the lender can make an informed decision about whether or not you qualify.

The mortgage lending process can take weeks, so it’s essential to remain patient and stay in communication with your lender throughout the duration. Doing this will enable them to gather all relevant information so that your application can move forward as quickly as possible.

Saving money is essential, as this will help with your down payment and closing costs. Try not to make large purchases that could deplete your savings account too quickly, such as vacations or new furniture.

Your credit score can significantly impact your eligibility for a mortgage, so it’s important to start working on improving it as soon as you’re ready to apply. Generally, a minimum credit score of 620 is necessary in order to be approved for most conventional loans; however, some lenders require even higher scores.

Before applying for a mortgage, it’s wise to work on decreasing your debt-to-income ratio (DTI). Your DTI is the percentage of gross monthly income that goes toward debt obligations such as housing costs, car payments, credit card bills and student loans. If this number exceeds 43 percent, it could make qualifying for a loan more challenging.

Be prepared to provide your lender with a thorough list of financial documents, such as tax returns and pay stubs. This will give them an accurate picture of your financial situation and allow them to assess how likely you are to pay back the loan.

The lender will check your credit, and if everything looks good, you’ll likely be approved. After that, they’ll give you a packet of documents to review and sign. At this point, you may also be invited to the title company for a closing meeting.

At this stage, you have the option to incorporate closing costs into your loan or pay them in full. In order to do so, bring along a valid photo ID, your down payment and the check for closing costs.

Your lender will send you a Closing Disclosure, which outlines all of the loan terms and fees involved. Before signing anything, be sure to thoroughly read over this document so that you are fully informed about what you’re agreeing to.

Lenders will review your assets and employment history, including any liens or judgments against you. If you’re self-employed, this will be of particular importance. To prove your viability, submit additional financial documents such as a comprehensive business plan or profit-and-loss statement.

After some time has passed, you should have a reliable source of income. Doing so can greatly enhance your chances for approval when applying for a mortgage loan.