Finding your dream home is easy, but obtaining a competitive home loan is not. Thankfully, with sufficient planning, you can obtain the best mortgage possible – providing you with significant financial savings in the long run.
Check for Credit Score Errors
The most important element of obtaining a competitive loan is your credit score. Even if you have stellar credit, obtain a copy of your credit report from the three reporting agencies to check for any reporting errors. Considering that 40% of credit reports have errors, it is important to resolve these problems before you apply for your mortgage.
Raise Your Credit Score
Generally, it takes six months to one year to improve your credit. The earlier you begin, the better your score will be. However, if you plan on applying for a loan within the next two months, you can still improve your credit. Reduce your debt-utilization ratio by paying down your credit cards and staying well below your maximum credit limits.
Show Your Savings
During the mortgage application process, the lenders will scrutinize your financial health. Do not keep your savings in a checking account. Instead, open a savings account or CD to demonstrate your ability to save money. Remember, the more you have for your down payment, the better your mortgage rate will be.
Becoming pre-qualified for your home loan locks in interest rates, protecting you from fluctuations. In addition, being pre-qualified demonstrates that you are a financially serious buyer, which aids greatly during your closing negotiations.
Planning ahead increases your probability of obtaining the best mortgage possible for your dream home.