Talk to Tim at 403-648-1541

Applying for a mortgage can be very stressful. This daunting task can be made less intimidating with the help of a good mortgage broker and adequate preparation. Here are 4 tips to help you get your mortgage approved with the least amount of stress.

1.Know your credit score

A lot hinges on your credit score, so it is a good piece of information to have before you even walk into the mortgage broker’s office. Even though you may think your credit score should be good, it pays to know for sure so you can make an informed decision. Your credit score is generated using a variety of factors besides how much debt you have. Missed or late payments reflect poorly on your score. You can order credit reports from agencies such as Equifax and TransUnion for minimal or no charge.

2.Save up
Make sure you have enough saved up for your down payment, and some more money on top of that, before you even walk into your mortgage broker’s office. Most mortgages require at least some form of down payment. The more money you can put forward as a down payment the better shape you are in, but be sure to have at least 3.5% of the total mortgage balance saved up. Besides the down payment you will also have to pay for closing costs, home inspections, home appraisals, title searches, application fees and other expenses that can add up quickly. Closing costs tend to be between 3% and 5% of the total mortgage cost. If you can save up as much as 20% of your down payment you may also be able to avoid private mortgage insurance, which tends to apply to homes without 20% equity.

3.Hold on to your job
Sticking with your current employer while going through the home buying process is integral to the success of your application. Lenders grant approval based on your finances at the time of your application, and getting laid off, quitting your job, accepting a lower paying job or becoming self employed changes your financial situation. This means your lender will need to reevaluate you to see if you still qualify for the loan, which adds time and additional costs to the home buying process.

4.Pay down debt and avoid new debt
The less you owe your creditors the more favorably your mortgage lender will look upon you. Any debts you have determine if you can get a mortgage and how much you will be allowed to borrow. Having a good debt-to-income ratio, one that is less than 36% of your gross monthly income, is important for mortgage application approval. Paying down your debt alters this ratio in your favor, and can help you acquire a better mortgage rate. In addition to paying down your debt you should also avoid acquiring new debt. Lenders will re-check your credit before they close the deal, and if your credit report reveals additional or new debts your mortgage application could be affected. Last month we did a series of posts about debt reduction strategies, which you may find helpful.

For more information about applying for a mortgage contact Tim Lacroix of CGY Mortgage today at 403.648.1541 and visit timlacroix.com.