Qualifying For A Loan

This is an image of the words "loan approved" in all green capital letters at an angle from top left to bottom right

The first step before buying a home is to get pre-approved for a mortgage. Here are some things you should know in order to insure you get qualified and see the price range you can shoot for.

Employment, past and present, is important when applying for a loan.

Don’t change jobs close to or during the loan application process. It’s imperative to show time at your current job, usually two years.

Part of qualifying for a loan depends on your debt to income ratio.

Don’t take on new debt by purchasing a vehicle or furniture. Just to be safe, try not to buy anything big on credit. Also don’t go crazy charging your current cards or letting your accounts fall behind. Credit card companies can negatively affect your credit score by reporting to the credit bureaus if you are 30 or more days behind. A lower credit score can disqualify you from getting a loan.

Don’t touch the money you’re saving for closing costs.

Some programs will allow you to move in for no money down, but most likely you’ll have to come the your closing with a cashier’s check. Make sure you have that money ready to use when it’s time for closing and that you don’t spend it!

Your loan officer will see everything by pulling your credit.

Don’t apply for any new credit. Hard inquiries can affect your credit score, although they don’t have the most impact. However, what affects credit score more is the credit age, or length of time you have credit open. Instead of closing credit cards you don’t want anymore, try leaving them open with a zero balance.

Also, be honest on your loan application and disclose all of your debts. They’ll show up on your credit report anyway so there’s no use in trying to hide anything.

All funds in your accounts need to be verified and from a credible source.

Do not make large deposits without checking with your loan officer first. There should be a paper trail showing where any large sum added to your account came from.

These are some important tips to follow when looking to get pre-approved. Once you find a lender that's right for you, after checking out a few, make sure to keep good communication with the person throughout your home-buying process.

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