How to Plan for Getting a Mortgage
How to Plan for Getting a Mortgage
The headlines for mortgage deals read how the rates are the lowest they have been in years! The rates are so low that you would be crazy to skip out on them, they say. It gets you thinking about buying a home.
However, how does one get started on the path to buying a home? There is a lot of prep so you can have a mortgage that does not take you for what you are worth. So what is a good process to be ready to get a mortgage?
Getting a mortgage can take its time and can sometimes be difficult. However, when you prepare for it, the process can be much easier and less chaotic. If you have thought about getting a mortgage, then use TrueFi to help you figure out how much you can afford, what style of mortgage you want, etc. via our mortgage calculator and other resources.
The headlines for mortgage deals read how the rates are the lowest they have been in years! The rates are so low that you would be crazy to skip out on them, they say. It gets you thinking about buying a home.
However, how does one get started on the path to buying a home? There is a lot of prep so you can have a mortgage that does not take you for what you are worth. So what is a good process to be ready to get a mortgage?
- Look at your credit report. Lenders will want to look at your credit report so it is a great practice to do this before they do. Obtain a copy of your credit report from the major bureaus and look for any errors or discrepancies. Why? Well doesn't it make sense to make sure that all the info that the lender is going to accept or deny you based on is correct? If you have an error on your report, then you can be denied a mortgage for something that is not true. Make sure your scores are also where you want or need them to be; if they are too low, then perhaps waiting a bit and improving your score is a good route to go.
- Get things in order. Take a look at your debt-to-income ratio and see where that stands. If your DTI ratio is too high, like above 43 percent, then you will want to lower that or the lender will possibly deny you. Some lenders like for the ratio to be even lower, like 36 percent, so shoot for lower than 43 percent. What is the DTI ratio? This is a combination of your monthly debts versus your gross income. So things like other loans and things considered "debts" are factored in; you do not have to worry about your gas bill or something like that being factored.
- Study up. Shop around for a home and a mortgage style that you like. Look at adjustable rate mortgages and fixed rate mortgages, as well as other styles. Using a mortgage broker will help a lot here.
- Think what you can afford. You want $500k for a mortgage? Well will you be able to afford the payments? Be realistic of what you can afford. You can always buy bigger later or refinance a mortgage.
- Remember the costs. Save up for that down payment and remember to consider other costs like your closing costs, etc.
Getting a mortgage can take its time and can sometimes be difficult. However, when you prepare for it, the process can be much easier and less chaotic. If you have thought about getting a mortgage, then use TrueFi to help you figure out how much you can afford, what style of mortgage you want, etc. via our mortgage calculator and other resources.