So you’ve found your dream home? And now you need to find a mortgage? It can be thrilling when you’re taking the leap to apply for your first mortgage. In some circumstances, applying for a mortgage can be a long and frustrating process, but it doesn’t have to be that way!
Many borrowers are nervous and ponder the question, “when is a good time to apply for a mortgage?” In truth, there’s never an excellent time to apply for a mortgage. Some times are better than others, but you can’t wait around for years until mortgage rates hit all-time-lows. The faster you jump on the mortgage ladder, the quicker you can start building personal wealth and equity.
The key to applying for a mortgage is being prepared because once your purchase offer is accepted, the clock begins ticking. On average, the typical time it takes to close a mortgage ranges from 45 to 60 days. So the sooner you apply, the better.
Your lender is likely to ask for documentation to support your loan application. Providing the correct documentation will determine if you will get approved for a mortgage. Therefore, before you begin any application, you should ensure you have the following documents:
Your lender may require additional documents, depending on your scenario. Lenders are likely to ask you about your employment history and financial history. So, you should provide as much evidence as possible on these two matters.
» MORE: Find the best mortgage lenders
The credit score is a pain in the neck for many borrowers, but it’s a vital part of getting a mortgage. You should get a copy of your credit score before applying for your mortgage. Don’t worry if you have a low credit score, you’re not the only one. Business failures are common and there are millions of self-employed Americans. Perhaps you’re curious about an overdraft affecting your mortgage application? The answer is yes, it can but you can also work around it.
The bigger the deposit — the less money you will need to repay. As a result, your monthly repayments will be smaller, and you will pay less mortgage insurance. Your deposit will also determine the type of loans that you can choose. Therefore, you should begin saving and accumulate a sizable deposit.
There are so many different loan options. For example, you could apply for a conventional loan or an unconventional loan. These loans include:
Many borrowers get confused about the vast options, and seeking professional help is always an excellent option.
How much can you afford? A typical rule of thumb is 28% of your gross monthly income. In turn, you’ll have an element of comfort if you ever have any employment or financial issues. For example, if you’re earning $30,000 per year — a mortgage on a $120,00 house is an excellent option for you. A joint mortgage is also a reasonable option, especially for couples where one party is self-employed.
Once you’ve gone through the above steps, you will want to gather all of your paperwork and begin the search for a lender. Many borrowers use the services of mortgage brokers to find the best lender. It’s important to consider good mortgage rates, low mortgage insurance costs, and the lowest closing costs while doing your research. There are several potential costs involved when getting a mortgage, and you need to find a transparent lender that can meet your needs.
You’ll be happy to hear that applying for a mortgage online is very similar to applying for a mortgage in person. If you’re looking to apply for a mortgage online, you will have to go through the following steps:
Once you have completed the above, you will need to prepare the following:
Getting a mortgage online isn’t much different from getting a mortgage in person. You will just need to shop around and find the best deal.
Applying for a mortgage doesn’t have to be a complex task. Often, it can be a straightforward scenario if you follow the above steps. Of course, if you’re self-employed or have specific concerns with your credit score, you are going to need expert advice. However, once you have all your documents in line, you are ready to seek out a lender.
You may face rejections and become frustrated with the process, but once you have your mortgage you can start building wealth and equity.