3 Tips When Applying For a Mortgage

Anyone who is in the market for a new home knows it can be an exciting time. It’s fun to look through listings, visit open houses and picture your dream lifestyle in various places. However, when you are serious about making a purchase or offer, you obviously need to consider the best type of financing. For people who don’t know where to begin, the following tips can help guide you through the process.

1. Know Your Financial Status

Most people know the ideal price range of the house they would like, but it’s easy to be tempted to reaching above the upper limits of your budget. Therefore, you need to take time to look at your numbers. There are many online resources that can help calculate your monthly payments, including adding homeowners insurance and property taxes. You want a payment that can be comfortably made, even if you encounter unexpected expenses that month.

It’s also important to know your credit score. Many credit card companies and banks can provide your credit score to you, and there are dozens of websites offering a free look at it. If something doesn’t seem right with the number, take time to look through your credit report for errors.

You should also understand PMI, or private mortgage insurance. If you are able to put 20 percent of the purchase price down, you can usually avoid having to pay it. PMI is an additional cost to you and protects the lender in the event you stop making payments.

2. Speak With a Financial Institution

It’s essential that you talk to a mortgage professional who is certified and has completed NMLS mortgage continuing education. They will be able to look through your income, debt and credit score to give you a general idea of the possible mortgage amount. They can also identify any potential issues or obstacles. When you speak with a mortgage company upfront, the process of making an offer is quicker and smoother.

3. Obtain a Realtor

Particularly when buying a home, a realtor’s job is indispensable. Although there are now many online resources when searching for the perfect house, a realtor should be able to help with all of the paperwork involved in making offers and counteroffers. They can walk you through the inspection and help with the closing, which is often overwhelming the first time.

Buying a home can seem like a complicated process, but it doesn’t have to be. As long as you know your financial status and contact a mortgage professional and realtor upfront, you are set up for success. You will soon be enjoying an amazing new home.