3 Things You Should Do Before Applying For A Home Loan

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Getting into your own home is an exciting time. Many people look forward to the day when they will be able to call themselves homeowners. However, even though the desire may be there, some people have a difficult time getting qualified for a home loan. The process for getting approved for a loan can be painful and aggressive, which is why it is important that before you start the process you understand what you need to do to get a favorable outcome. Here are a couple things you should know.

1. Pay Off As Much Debt As Possible

One thing many people don't realize is that your debt to income ratio will be one of the most important numbers in the whole process. If this number doesn't match up, it doesn't matter how good your credit is or how big your down payment, you will most likely be denied.

Most mortgage lenders want you to keep your debt to income ratio under 43%. This means that paying off more debts, such as credit cards, medical bills and even car loans, will help you to qualify for the home easier.

2. Don't Open New Credit Lines Before Applying For The Loan

Each time you open a new line of credit, even a store credit card, it hurts your credit score. This doesn't mean that you can't get it back up, but it will take time. This is why it is best if you can avoid getting a car loan, opening a credit card, or getting a procedure that is put on a payment plan before the home loan. By doing this you will protect your credit score.

Additionally, as previously mentioned, any new lines of credit will count against you in your debt to income. Thus, it is important for two reasons that you avoid opening any new lines of credit.

3. Start Saving Now

Even though the most important factors are usually your debt to income and credit score, the lender will also look at other factors to determine if you are eligible. For example, they want to see that you have an emergency fund and have good savings so that if things do get hard, you have something to draw on. Thus, if you have a time of unemployment they see that you can make your mortgage payments while you get back on your feet.

By doing these things you can improve your chances of getting a home loan. Talk to a real estate agent, like Conrad Bitangcol, to start looking at homes within your mortgage budget.