3 Things to Do Before Applying for a Home Loan

3 Things to Do Before Applying for a Home Loan

For many first-time home buyers, the road map to homeownership has many unexpected turns.  Before committing to hiring a realtor to find your dream home, make sure these steps have been taken to reassure financial stability throughout the home buying process.


Check Your Credit Score

Credit scores are one of the first items a lender will consider when an individual or partners submit a home loan application.  Before speaking with a lender, it’s important to know what they’ll be reviewing. 

  • Timely payments

  • If there are current delinquencies-6 month timeframe

  • Debt-to-income ratio

  • FICO credit score

Learn more about your credit score and receive your free annual credit report.

Know Your Monthly Income and Debts

Write down all income sources and any debts that go out monthly.  If your debt to income ratio is more than 43%, it can be considered “risky borrowing” depending on the type of debt.

To better understand how much purchasing a home could change the income vs. debt scale, look at any rental and/or transportation current costs.  Moving closer to work may cut down on transportation costs, allowing for some room in what you’re willing to spend on a home.

Not sure what the reasonable monthly mortgage payment should be in your state?  HUD guidelines state that mortgage payments should not exceed more than 28% of your pre-taxed income.  This creates a standard for fair market pricing based on a family’s median income.

Use our purchase calculators to see how much home you can afford and if you pre-qualify.

Save for the Down Payment and Closing Costs

There are a lot of different expenses that a first-time home buyer will experience.  The two most common are the down payment and closing costs.  Programs are available to as little as 3% down on home loans.

Down Payment:  Money given to the home’s seller, expressed in percentages, to ensure a financial interest in the home. 

Closing Costs:  Fees and expenses that are paid to the companies and individuals involved that assist in securing the mortgage.  This can include:

  • Lender's origination fee

  • Deposit verification fees

  • Attorney's fees

  • The appraisal fee and any inspection fees

  • Cost of title insurance and title examination

  • Property survey

  • Credit reports (actual costs)

  • Transfer stamps, recording fees, and taxes

Be Prepared for the House Hunting Experience

Questions about homeownership?  Our mortgage loan officers are here for you.  

What are some ways you're preparing for homeownership?  Tell us in the comment section below!

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