4 Financial Moves You Should Make Before Shopping for a Mortgage
This spring more homebuyers may have a better chance of qualifying for a mortgage thanks to Fannie Mae's changes to the way they are reviewing people's credit.
Spring is approaching and the peak home buying season is upon us. There are plenty of things you can do to prepare for buying a home. Below we listed 4 steps to make sure you can qualify:
Save! It is best to have between 10-20 percent of the home’s cost saved as a down payment. In addition, you will want to save between 3 to 6 months’ worth of bills, if you will need to perform home repairs.
Get preapproved: Pre-approval is an important step in the mortgage process. It determines how much money you are qualified to borrow. After preapproval you will have a realistic expectation of the homes within your budget. You may qualify for a loan 2-3 times your gross annual income.
Don’t change jobs: Changing jobs is a red flag for mortgage lenders. Sticking with your employer through the mortgage process is your safest bet. Any changes to your income status can delay the process. Especially if you take a lower-paying position or quit to be self-employed, mortgage lenders will have to reevaluate your entire financial situation.
Improve your credit score: Your credit score can make or break you during the mortgage process. To improve your credit score, avoid buying any high-ticket items before you complete the mortgage process. Do not open up a new line of credit as mortgage lenders see this as increased risk.
Thanks to Fannie Mae’s new policy on review credit scores, you don’t have to worry about delinquent or late payments. Fannie now uses trended credit data to analyze the exact monthly payments a borrower has been making on his or her credit cards, mortgages, and student loans. This will be launching this summer.
If you have any questions about how to be prepared for the mortgage process, chat one of our mortgage advisors now or call us today at 1-844-778-5626.