A Crucial Step to Improving Your Mortgage Qualification

So it’s time to upgrade your status from being a renter to a homeowner. However, buying a home takes more than just having the money, looking for the perfect place, and sending in your mortgage application. There are many things you have to prepare for, and seeing that the home financing service is the biggest player in this process, you want to do everything to qualify.
The good news is, certain strategies will help increase your chances of securing one of the most affordable mortgages. Utah is one of these states that includes the strategy of paying your existing debts.

The impact of your outstanding balances on your mortgage application

This strategy doesn’t automatically mean that you have to clear your debts to quality for a home loan. However, the fewer debts you have, the better your standing is when it comes to your mortgage. How much you owe at the moment plays a major role in your mortgage qualifications and the amount of money you can borrow from a lender.
All lending institutions first take a look at their applicants’ debt-to-income ratio before they approve (or reject) the mortgage. As such, having a high debt ratio puts you at risk of disqualification, since this means you still owe other creditors – such as credit card companies – a lot. They automatically assume that you may have a hard time making mortgage repayments on top of your other loans.

The 36% limit

Although not all lending institutions follow this, most do. This 36%  should be the limit of a borrower’s total debts versus their gross monthly income. When your current balance total is close to 36% of your gross monthly income, lenders may already reject your application.
You should first take a close look at your debts before applying for a mortgage. Pay off what you can while still saving up for a down payment, as this will free up lines of credit that will make you more favorable in the eyes of lenders.

4 Useful Reminders When Applying for a Home Loan

Buying a home is a huge undertaking. It is a complex process which makes it a little too intimidating. One wrong move could ruin your chances to own and buy the home you’ve been dreaming about. This is why it’s important to take this task seriously to avoid committing any mistakes. To make the process less of a burden, here are some reminders recommended by Altius Mortgage Group and other mortgage experts in Utah, to assist you throughout the whole process.

1. Be Sure You’re Financially Ready for It.

Before you even start hunting for houses, you have to ensure that your finances are well-managed and that you have balanced your income and expenses. Try to work and improve your credit score as well as your monthly expenses or obligations at a minimum. Lenders often go over on these things to assess your financial capacities and limitations.

2. Take Time to Understand Upfront Costs.

Upfront costs are the additional fees that lenders would ask for you on top of the amount you’re borrowing. The costs usually vary depending on the lender. There are those that have lower fees but higher purchasing amounts. Most of these are on a case-to-case basis, so you have to really understand it the fees to find out which among the offers would work perfectly for you.

3. If It Gets Complicated, Call a Pro.

The whole process will certainly be confusing at a certain point. If you happen to be struggling in understanding or absorbing everything, you could always hire someone to do it for you or guide you. As mentioned earlier, a mortgage is a complicated business which has a lot of possibilities mistakes.

4. Choose Your Mortgage Wisely.

Borrowers are typically faced with two options when choosing a loan type — interest-only mortgage or fixed-rate mortgage. To make the selection process easier, always list down the pros and cons of each option. Once you lay down everything, your mortgage application will become more manageable and a lot easier.

Buying a home is a highly challenging task, most especially the when it comes to getting a mortgage. The process sounds tedious, but with proper knowledge paired with informed decisions, it can be more manageable.

Steps to a Worry-Free Mortgage

Mortgage Loan In UtahIs it your first time applying for a mortgage? You may be nervous since buying a home is a long-term commitment. Mortgages don’t have to be as intimidating as some make it seem. With knowledge about the application process and tips from experts, you may be able to get the best mortgage deal on the market.

Check Your Credit

First, before applying for any mortgage loan, you have to check your credit score. The credit score is a measurement lenders use to determine the likelihood of you paying back the loan. Individuals with great credit scores will be able to apply for loans at lower interest rates. A low credit score will need improvement.

Improve Your Score

Improving your credit score entails you to pay your bills on time; paying balances on your credit card, and avoiding further debt. According to an expert of Investopedia, it’s best to spend six months or more in improving your credit score.

Preapprove Yourself

Once you have the credit, refrain from house-hunting right away. You should next seek mortgage preapproval. Preapproval helps determine how much money you will be able to borrow. Lenders check your credit, financial and employment information, and qualifications for a mortgage in processing preapproval. Once you are preapproved, you can start house-hunting with a realistic picture of which houses fall within your budget.

Shop for a Lender

The next step is to find a lender offering good mortgage rates in Utah. You can compare mortgage rates and lender fees of different lenders here in Utah. You can further narrow down your choices by asking for referrals from contacts or friends or by reading lender reviews online. Once you have a lender, you can start applying for a mortgage loan.

Continue to Save Up

Your mortgage concerns only begin with the preparation and the application process. Through the years, as you pay off your mortgage, you have to remember to budget your expenses. Also, having 3 to 6 month worth of living expenses help you cover for unexpected emergencies.

With these steps, you can avoid the pressures of the mortgage. You don’t have to spend the next thirty years of your life worrying about such things.