Home buyers often ask (and many unaware) how they should prepare to buy a home. This mortgage preparation Q and A will answer many of these questions.
Mortgage Preparation Q and A
What people can do to get ready, financially, to buy a house?
- Don’t make any large purchases (including furniture) or take out new credit. Underwriters love payment history. Having a rent payment similar to a proposed mortgage payment is great. If you aren’t paying rent, then save a fixed amount every month to prove that you’re able to make that payment.
If people are planning to sell their current house and buy a new one, what should they keep in mind?
- Market conditions, guidelines and interest rates change frequently. Keep in touch with your realtor and your mortgage banker to make sure that you are up to date on the market.
If people plan to rent their house out, then buy new, what should they keep in mind?
- This situation can be a little complicated. There are often equity requirements that borrowers have to meet with the previous primary residence. There are also limitations and guidelines that determine how much rental income the borrower can use to qualify for the new purchase.
If someone works on fixing their credit now, about how long does it take to turn around that score?
- Every credit situation is different – Some situations can be resolved in a matter of days, and other situations can take months to rectify. Although mortgage bankers aren’t credit counselors, they generally have a good idea of what needs to be done to repair credit. Contact a mortgage professional with any specific credit questions.
What can people do if they “lack credit.” Why is it a problem when people DON’T have credit cards?
- Mortgage companies want to see that you’re capable of consistently making a monthly payment. A credit card is one of the easiest lines of a credit to receive. Underwriters just want you to prove that you are capable of making your payments on outstanding credit.
Why is it important to put off big loans until you get that house? Why does it make such a big difference? Can you give an example?
- Debt to income ratios are a huge factor when purchasing a house. This ratio takes into account the proposed mortgage payment, monthly debts, and monthly income.
Any other thoughts you’d like to share that I haven’t thought of?
Also – Read about the Mortgage Pre-approval process so you are a ready buyer