If you’re considering buying a home and unsure of whether the time is right, learn more about the variables that affect your eligibility for a mortgage and what you can do to increase your chances of acquiring one.
When considering the best time to apply for a mortgage, timing involves much more than just market circumstances. The second most significant aspect of your mortgage transaction, service, depends heavily on timing.
3 Ideal Moment to Apply for a Mortgage
- Once Your Credit Score Is Available. Any sort of loan carries some risk for both the lender and you, the borrower. Lenders can safeguard their interests by giving the best terms to borrowers with the best credit scores. A lender may completely reject a borrower’s mortgage application if they decide that the borrower’s credit history isn’t strong enough. Your chances of getting a mortgage approval generally increase with your credit score. If you have a very good or superb score, you’ll also get a cheaper interest rate on your mortgage. Credit ratings are wonderful since they aren’t set in stone. Your credit score probably changes from month to month depending on how much debt you currently carry and whether you have and utilize credit cards. You may take steps to raise your score if you’re interested in applying for a mortgage but don’t yet have a very good or excellent score. You can concentrate on paying off your debt if you have a lot of it. If you’ve fallen behind on payments, get current and commit to paying everything on time to improve your credit score.
- As Soon as You Have a Regular Income. Lenders often want evidence that you have had a stable job and a predictable income, despite the fact that it is difficult to predict the future with any degree of precision. They will examine several years’ worth of your tax returns to do that. Your tax returns should reflect a constant or slowly rising income over time. Lenders typically examine your employment history in addition to your income. They frequently demand proof that you have worked for the same company for at least two years. Lenders will require proof of income for at least two years if you are self-employed. You may need to wait a few years before applying for a mortgage if you recently started a new job or are just beginning your career to give your income and employment time to stabilize.
- Once You Have Enough Money Saved. According to conventional thinking, you should have at least enough money to put 20% of the home’s cost down. You would need to have $40,000 in cash to put down on a $200,000 house. It’s excellent if you have saved up that much money or 20 percent of the cost of the house. However, just because you don’t have that much cash on hand doesn’t imply you won’t be able to purchase a property or obtain a mortgage. A down payment is not necessary for some programs, including VA and USDA loans. Others, like FHA loans, just require a 3.5 percent down payment. With as low as 3 percent down payment, you can also obtain a conventional or non-government backed mortgage.
Let Mortgages by Misty Find Your Ideal Loan Option
You must have enough money to cover closing costs and set aside money if the house needs repairs or replacements after you’ve purchased it. The amount of money you should set aside before buying a home also depends on its age and condition.
If your house is older and has fewer updates, you might want to keep more money in reserve. You can frequently safely have a smaller home repair emergency fund if the house is newer or has recently been updated.
If you’re looking for the best options for mortgage loans in Tempe, look no further than Mortgages by Misty. We can help you choose the loan product that is right for you. Call us now at (480) 618-5358 to set up your consultation!