What To Do Before Applying for a Mortgage – Part 2
Before applying for a mortgage, if you want to secure the best deal when buying a home and ensure the most pleasant experience, there are certain things you need to do. In the first installment of our mortgage planning series, you learned about the importance of paying your bills on time, avoiding larger purchase, paying off high interest debt, saving for closing costs and determining what you need in a home. It is now time to consider the remaining five ducks you need to put in a row before you apply for a mortgage home loan.
6. If you don’t have a REALTOR ®, find one
Real estate agents are not just handy when selling a home; they are invaluable when buying one. A REALTOR ® can help you narrow down your housing needs, provide you with neighborhood and community details, show you properties for sale, and help you negotiate the best deal when it comes time to buy. A REALTOR® may also have mortgage and lender references to provide to you.
7. Be realistic about what you can afford
“Play house” for a few months before applying for a mortgage. If you think you will be comfortable with a $1200 mortgage payment, but you are currently paying $600 per month in rent, set aside the difference. You will build your down payment savings while experiencing the real life effects on your budget. If that $1200 payment eats up too much of your disposable income for comfort, you now know you need to choose a less expensive home.
8. Find a mortgage lender you can trust
Your REALTOR® is a great source for a referral. He likely knows more than one mortgage lender in your area, and possibly even one who specializes in the type of loan you desire (FHA, VA, etc.). You may also wish to consider the lenders at your bank or credit union, especially if you have been with the financial institution for a long time.
9. Stay in your current job
As the economy improves, many professionals who previously felt stuck in their jobs are choosing to move to greener pastures. If you are preparing to buy a home, stick with your current employer. Lenders like to see stability, and the more years you have within the same company, the more stable you appear. You can start a job search after you have closed on your new home. Unless you are moving to a different city, NEVER change jobs just before applying for a mortgage!
10. Get pre-approved for a mortgage
A pre-approval differs from a pre-qualification. Whereas a pre-qualification just results in an estimate of the maximum mortgage for which you may qualify, a pre-approval involves actual underwriting steps. Your lender will pull your credit report and verify your debt-to-income ratio, putting you that much closer to locking in an actual loan once you find a prospective home.
If you are ready to begin your Seattle area home search, I hope you will consider our services. Specializing in the Eastside Seattle real estate market, we can assist you with information on neighborhoods and schools, searching property listings, referrals to mortgage lenders and more.