How to get a Home Mortgage on a home in El Sereno, Los Angeles is something every type homebuyer should be thinking about prior to making a home purchase! One of the things that first time homebuyers will often ask me is what they should do first in the home buying process. My answer is always the same, which is go out and get a pre-approval for a mortgage.
Getting ready for a home mortgage is something that a handful of El Sereno Real Estate buyers don’t often consider. Taking out a mortgage loan can be one of the most critical parts of the home purchasing process.
The amount that you’re approved for will often determine how much you have to spend on a home. The interest rate will dictate how much you will be paying for the next fifteen to thirty years depending upon the term of your home loan.
With these reasons in mind, it is generally a great idea to get ready for the upcoming El Sereno mortgage loan before chatting with a reputable lender and asking for an approval. Here are some steps to help make sure that your financial house is in order before taking out a mortgage loan. Preparing for getting a Silver Lake mortgage is something all homebuyers should do!
Check The Credit Report and Correct Mistakes
Making sure your financial cards are in order is a large part of how to how to prepare to get a an approved home mortgage in El Sereno, Los Angeles. Think about for a moment that the Federal Trade Commission estimates that as many as one in five people have a drastic error on their credit reports.
Next add in the notion that just ten points higher or lower on a credit score could potentially mean a difference of tens of thousands of dollars in interest paid over the lifetime of a mortgage.
Now it should be obvious why it is essential to Check a Credit Report. In addition, make sure that there are no recent delinquencies or collection notices on the account. If these types of problems were recently resolved, it could take several weeks or even months before applying for a mortgage. There are ways however to expedite that process.
This step should really be completed a few months before you’re ready to apply for a mortgage. If errors are discovered it can be a long and frustrating process to begin correcting them. Considering the potential savings that can be made by boosting your score just a few points, however, it is worth it to make sure that your credit report is precise. Making sure your credit history is accurate should be an essential part of preparing for getting a mortgage.
Establish Income and Assets
A home lender will help you clearly understand if you’re able to pay the loan back comfortably. Most lenders will generally examine two main areas. The first will be your monthly income. Our El Sereno Listing Agents say those interested in taking out a loan should try and get away from job hopping in the months leading up to the loan application process.
Holding down a job for a handful of months, and preferably several years, before applying is often helpful but not all jobs are long-term.
Similarly, a lender will want to see that the borrower has assets that can be used toward the down payment, closing costs and reserves. They will typically investigate any paper trails, so it does not work to just transfer money into a savings account from a relative in the days or weeks leading up to the application.
The assets in the bank should be established or “seasoned” as lenders call assets that are in a bank or investment account for the past several months.
Getting a mortgage today is different then previous months. You need to be prepared to have everything you have done financially recently scrutinized. There are a handful of people who will tell you that getting a mortgage today is like being hired by the federal government to work in the White House.
In other words, the lending institution is going to leave no stone unturned in making sure you are an outstanding candidate to have a mortgage.
Eliminate Other Debt
Most of the time, the other facet that homebuyers don’t think about enough when getting a mortgage is their current debt load. In the excitement of wanting to buy some first time homebuyers often overlook where they currently stand with other financial obligations.
Banks often want to avoid having the debt of a particular person surpass a certain percentage of their monthly income. This means that they will be closely scrutinizing any other debt, such as credit card debt, car loans, etc. If at all possible, pay off all credit cards and as much of other types of debt as possible to minimize the monthly debt payments.
Comparably, the time around taking out a new mortgage is not the time to try and get a new loan for something else. Even if the person will still have a low income to debt ratio, the most recent credit applications are a red flag that could mean you’ve obtained new but undisclosed debt.
Being in the real estate industry, as a professional Realtor, our El Sereno Listing Agents get to hear the bad stories from other Realtors within our circle. One of the general errors that homebuyer’s make is going out and getting a new car or buying furniture while they are getting a mortgage to buy a home.
Our El Sereno Listing Agents say that financing a large purchase while you are trying to secure a home mortgage is a huge mistake. In fact, it could cause you not to be able to close on your property when you are scheduled to! Part of getting ready to get a mortgage is being fiscally responsible during the entire process.
Get Pre-Approved and Lock In The Rate
Once the process of filling out applications for mortgage loans has begun, there are two critical steps. First, make sure you get pre-approved for a loan. Understand that there is a clear difference between being what’s called “pre-qualified” for a loan and getting pre-approved. In most cases, having a pre-qualification letter means nothing more than you have the income to afford a certain price point when looking at homes.
Getting pre-approved however is a lot more involved. The lender is going to check your credit, verify your financial status and check your employment. After all these things are completed, the mortgage company or bank is going to have a pretty good picture of who you are as a borrower.
When purchasing or selling a home, one of the most frustrating developments for everyone involved is the offer falling through. For this reason, sellers are often most interested in buyers who are pre-approved by their bank for a loan. This means that they have a definite idea of how much they are approved for and there will not be any problems with securing the needed loan.
Secondly, once the borrower has secured a home mortgage that they are happy with, it is important to Lock In The Rate. Since mortgage rates change day to day, borrowers should not assume that the mortgage they qualify for today will be available tomorrow, that is unless they lock in the rate.
It is also essential not to think that any specific rate is locked in unless they have reassurance in writing. This becomes especially crucial if your finances are tight and the increase in a rate could cause you to no longer qualify for the loan. Our El Sereno Sellers Agents say that you need to make sure to document any discussions you have with your mortgage broker or lender when locking a rate.
Securing a mortgage is one of the most important aspects of the entire home buying experience. The mortgage terms determines how much a buyer can spend on a home and how much they will be paying each month for the next fifteen to thirty years. Taking the right steps to secure the best mortgage possible can go a long way in making the entire real estate buying process easier and much smoother.
Following this advice when getting a mortgage will put you in a better financial position knowing that you did all you could to have the best mortgage terms and conditions moving forward. Having done all your homework preparing for a mortgage in advance will put you in an incredible location to begin your journey of finding the home of your dreams.