Wednesday, July 14, 2010

Getting Approved for a Home Loan...4 Basic Truths

Getting approved for a home loan can be a nail-biting experience for some people.  There's the whole uncertainty of the entire process, the waiting, and the overall anxiety that comes from getting approved for a home loan.  However, below are some simple ways to calm your nerves and ease your fears regarding the process:

  1. Pay Everything on Time!  Even though this sounds pretty obvious, many borrowers will get so wrapped up in their every day lives that they will forget to pay a bill.  A recent late pay on your credit report could increase the interest rate quoted for the home loan or worse...jeopardize your chances of getting the loan altogether.  To avoid late pays, send yourself online reminders via your bank or internet calendar, write it down in your Day Planner, or post a sticky note on the bathroom mirror.  Whatever way you choose to be organized, pay those bills.
  2. Don't Pay Ahead.  It's not necessary to have all your debts paid in full when you are ready to start the loan process.  In some ways, having some debt with a good payment history can be stronger.  There are some underwriting systems that will allow higher debt to income ratios, depending on the status of everything else in your file.  Your mortgage planner can guide you here.
  3. Save, Save, Save.  However...should there be a debt that the underwriter wants to have paid off, having cash on hand will allow you to do that comfortably without jeopardizing yourself financially in other areas.  In addition, just having the savings in general can be a positive factor in the loan approval process.
  4. Do NOT Obtain New Debt!  I know this one also sounds like a no-brainer, but there are people out there that believe once they have been pre-approved that they can start buying things for their new, appliances, paint, etc.  DON'T DO IT!!  Additional debt can easily ruin a pre-approval.  Wait until you close on your home.

And your Realtor, we are here to help.  Buying or selling a home can be an OVERWHELMING experience for anyone...whether it's your first time or your fifth.  If you have a question, we'll have the answers.  Simple and straight-forward...we're there every step of the way.

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