If you have decided you are at the point in your life where you are ready to invest your money into a property and you want to own a home, it's time to talk with a mortgage company. There are a lot of factors that determine if you can purchase a home or not, and you need more than a reliable source of income. To improve your chances of getting the application approved, and to look good for the mortgage company, you'll want to do the following things before you apply.
Lower Your Debt to Income Ratio
Lower your debt to income ratio. This is the amount of debt you have in comparison to the amount of income you have coming in. If you have one credit card with a high balance, or if you owe more on your vehicle than you make in a year, than you need to manage that debt before you apply for a mortgage.
Practice Saving What You'll Have to Pay
If you currently aren't paying any type of rent, practice paying what you think you can afford into a savings account each month. If you have rent, figure out the difference between the rent and the mortgage, and then put that month into a savings or investor checking account. This shows the mortgage company what you can realistically pay to them, and you'll have funds for a down payment and the costs associated with moving.
Get a Credit Report
You may have a bad credit score because of some old medical bill you don't know is unpaid or because you have a bill that you didn't know existed. Get a free copy of your credit report from one of the three credit bureaus to see what your score reports, and to see what you need to improve. You may want to get all three reports, since different blemishes could be on different reports and you don't know what one the mortgage company will use.
Different mortgage companies have their own regulations when approving people for a loan, so compare the interest rates, credit requirements and more before allowing a mortgage company to pull your credit score. If you're a first-time home buyer, you may qualify for an FHA loan, which is easier to get in comparison to a standard mortgage. Talk with the mortgage experts in your area to get the mortgage you need. You can also click here for more information.