So you’re finally ready to take that big step and buy your first house. Exciting! You know you want to beat the rising interest rates and costs of housing by buying soon, but the question remains: will you be able to get a mortgage? Though it’s easier to get a mortgage now than it was a few years ago, it’s still something that’s a big challenge for many people. Here are some tips for buying a house for the first time and getting a mortgage in today’s housing market:
Put More Money Down
Putting more money down on your house means that your mortgage payments will be smaller, meaning that the bank is more likely to grant you the loan. This is especially helpful if your credit score is less than perfect. You will be more likely forgiven for a flawed credit score if you can put more money down straight away and pay back less to the bank.
Improve your Credit Score
These days, even people with high credit scores are being denied loans which makes it especially important to keep your credit score intact. Order a credit report so you can know exactly what you’re dealing with.
Don’t Open New Cards
While you’re in the process of applying for a mortgage, avoid opening any new credit cards. You might think that it would help your credit score but the application process actually pulls down your score. Even though it might only be a few points, it could actually affect whether you are granted that mortgage or not.
Pay Off your Debt
Before you apply for a mortgage you should make sure that your debt-to-income ratio is 28% or less. Make sure that you don’t have any overly burdensome car loans, student loans or credit card loans before you decide to take on the financial commitment of a mortgage.
Allow More Time
You really want to give yourself more time to apply for a mortgage than you initially think you will need. Improving your credit score is a process that can take a good deal of time, as is squaring away your other debts. Clearing credit errors is something else that can definitely take a few months to sort out. Give yourself at least a six-month head start to prepare for your mortgage.