When you understand the mortgage loan process and how to qualify, it makes the process much easier. By doing your homework, you can avoid the mistakes made by many first-time homebuyers. Here are a few tips on how to qualify for a home mortgage.
Save for a down payment
Some home buyers can buy a home without a down payment, but that is not common. It’s always best to approach a lender with a down payment in hand. Lenders recommend coming to the table with 20 percent, but 15 to 10 percent also puts you in a good position for closing. The more you can put down at closing, the less you will pay in financing over the lifetime of your home mortgage.
Determine what you can afford
Before you look for a home, determine how much home you can afford. Your down payment, income, and debt are determining factors when deciding how much home you can afford. Online home mortgage calculators allow you to enter your income and determine an affordable price range.
Work on your credit score
Your credit score is a factor lenders use to determine your eligibility for a mortgage. A credit score of 720 or better will make you eligible for the more favorable mortgage rates. If your credit score is lower, a lender may approve you but you may not qualify for the lowest rate.
Have a steady job history
Lenders will take your job history into consideration. They want to ensure you can repay the mortgage. Most borrows should have at least a two year history at their current job. If you have had several jobs within a short time, you may be denied. Those who work on commission or are self-employed will need to provide banks statements and may need to provide additional documents for income verification.
If you need help navigating the mortgage process, contact the mortgage team at FirstBank Southwest. Our low rates allow families to get into the home of their dreams. Call us today at 806.322.7238 to speak to one of our mortgage experts.