How To Prepare For a Mortgage
1. Check your credit score.
Check your credit score with the credit reporting agencies: Equifax, Experian, and Transunion. These are the credit reporting agencies that generate your credit score. They use a formula that they do not share to generate a score based on the reports they receive from credit card companies, utilities, etc. Your credit score gives a lender some idea of how likely you are to pay back the money they lend you. The main reason to check your credit score is to get any inaccuracies corrected before you apply for a mortgage. The companies need to correct any inaccuracies in your credit reporting history.
2. Gather your records together.
Get all of your records for tax returns, pay stubs, bank statements and any other information that your mortgage provider might need and place it in a file so that you know where it is. Nothing slows down mortgage approval more than not having everything that the loan officer needs to approve your mortgage. It is easier to grab one file than it is to search all over for everything that you need the night before your appointment.
3. Save for a down payment and escrow expenses.
Hopefully by the time you start shopping for a mortgage you have some money set aside to cover the down payment and escrow fees. If you are a “first time home buyer” check out Washington State Housing Finance Commission and see what you have to do to qualify for down payment assistance. Or check out the “0 down payment mortgage” from Key Bank. You can find links to both in the resource section of this website.
4. Get pre-approved.
The final step is to get pre-approved. Once you are pre-approved, talk to your real estate broker and let him or her know how much home you can afford. With this information he/she should be able to find the home that you want to buy in a price that you can afford.
Good luck with your search for your new home.