Are you looking to take the next step in your life and become a homeowner? If you are, that’s great! Homeownership is a fantastic way to build long-term wealth, and it’s very rewarding. That being said, purchasing a home is often easier said than done. Unless you have the cash on hand to purchase a six-figure property, you’ll probably need to get a mortgage.
The mortgage qualification process can be a little confusing, so I’ve broken things down into three easy steps you can follow. Here’s how to qualify for a home loan:
1. Find a lender. There are two main types of mortgage lenders: direct lenders and mortgage brokers. Choosing a direct lender, like a bank or credit union, gives you the benefit of working with one entity for the entire loan process. That being said, rates and fees vary wildly from lender to lender—you’ll need to do a lot of shopping around if you want to get the best deal possible. Meanwhile, a mortgage broker does all that hard work for you. They shop around on your behalf so that you’ll get a fantastic deal. Plus, you’ll only need to apply once, so once you’re approved, you don’t need to worry.
“The higher your credit score, the lower your rate.”
2. Get your credit score as high as possible. Most lenders require a score of at least 620 for a conventional mortgage and 580 for an FHA loan. However, even if you already meet the requirements, you should still try to get your score as high as possible since buyers with higher credit scores tend to get better interest rates.
3. Have proof of income, assets, and employment ready. Your lender will want to make sure you’re a safe bet to pay your monthly mortgage, so you’ll need to prove you can do it. Have paystubs, tax returns, bank statements, and any other necessary documents ready so that you don’t get caught off guard or slow down the process.
Hopefully, this demystified the approval process a little bit. If you have questions about which specific documents you need or how you can raise your credit score, don’t hesitate to reach out via phone or email. I’d love to speak with you!