Buying your first home can be exciting and a fun experience. However finding the right home is just one step in the process. Applying for your first home loan or getting a mortgage is like opening your underwear drawer to a stranger. Before completing a mortgage application, through an open house, you have to know your monthly income, The sum of your monthly debt payments (student loans, auto loans, and credit card minimum payments), credit score, how much money you can put down and how much house you can afford. If you are interested in purchasing a home in Laguna Hills CA, Integrated Realty Group will guide you with the mortgage processing.
Here are some tips to get approved for your first mortgage
Calculate your income and your monthly debt obligations
The first step for preparing to apply for a mortgage is documenting your monthly income and debt payments. You will have to provide at two weeks of pay stubs to your lender. If you are self-employed, expect the underwriting process to be a bit more involved. You will have to submit a few copies of your past one or two tax returns. Then, the lender will count the average of your last two year’s income or the lower of the two numbers. Large debt payments will limit the size of the mortgage approval you can get. If it’s possible, pay these loans off or avoid taking new loan payments on before applying for a first mortgage.
Give your credit health a checkup
Before you apply for a mortgage, obtain both your credit score and your credit history report. You will want to verify there are no mistakes on the report or recent derogatory items like late payments.
Determine your mortgage budget
A great rule is that your total housing payment (fees, insurance, and taxes), shouldn’t be any more than 25% of gross income. For example, if you and your co-buyer earn $80,000 a year, your combined maximum housing payment should be of $2,333 a month. But it’s recommended sticking with a total house payment of 25% of gross income.
You will need proof of income
You are also likely to be asked for three months worth of bank statements and payslips, that way the lender can look at both how much you have coming in as well as your outgoings.
How much can you save for a down payment?
Determine how much you can save for a down payment to put towards your first home. Expect your mortgage lender to obtain at least a 10% down payment unless you are getting an FHA loan or another particular program loan.
You can meet with a mortgage lender and get pre-approved at any time. It means that the lender thinks based on your credit score income and some other factors you should be able to get approved for a mortgage. Most sellers will want to see a pre-approval within a couple of days of receiving your offer. This video will help you understand the mortgage qualification process and all the things that imply.