If you are ready to purchase a home, you are going to need to apply for a mortgage loan. There are a few things that you can do to ensure that you are ready for the application process.
Lower Your Credit Card Debit
Before you get ready to purchase a home, make sure that you have a handle on your credit card debit. You don't want to be carrying cards that are maxed out or close to maxed out. Pay down your credit cards so that you are only carrying a low balance that you can pay off each month or get rid of any debit on your credit cards completely. A high debt-to-income ration, which is in part calculated by how much debit you are carrying on your credit cards, could cause you to end up with a more expensive home loan.
Pay Down Other Loans
If you are carrying big balances on other loans, you may want to take some time to either pay off the smaller loans or make some big payments on the larger loans to lower the overall balance. Once again, paying down the amount that you owe on car, business and school loans will lower your overall debit-to-income ratio and help you secure a home loan with better terms.
Check Your Credit Score
You should also check your credit score and your credit report. Credit reporting agencies will give you at least one free report per year. Use this report to determine where you are carrying the most debit and to determine how you can get rid of this debit.
Also, check to make sure that the information on your credit report is accurate. If there is inaccurate negative information on your credit report, you are going to want to work to get that information removed so that you can get rid of its negative impact on your credit score.
Save Up Some Cash
Finally, make sure that you save up some cash. You are going to want to have some cash so you can make a down deposit on your home and cover the closing costs. You are also going to need some cash for moving expenses and for the little repairs and fixes you are going to want to make to your home.
Before you apply for a mortgage, make sure that you are saving up cash, paying down debt and checking your credit report to make sure that it is accurately reflective of your financial history.