When you desire to actually own a home, the first step you must take is to become approved by a mortgage lender. While advertisements are designed to make you believe that this is an easy and relatively straightforward process, the truth is far from this. In fact, becoming approved for a mortgage is one of the most difficult financial situations millions of Americans will face within their lifetime. Because of this, it’s essential that you spend a decent amount of time researching the various qualifications and scenarios you’ll likely be faced with.
The first step in the process of becoming approved for a mortgage is hold the proper credit score to buy a house. The minimum FICO score to qualify for a mortgage is currently 580, however obtaining a mortgage at this level can be difficult. It is recommended to have a credit score of at least 650 before buying your first home. Although obtaining a mortgage is unique and can vary from person-to-person, there are several tips that are considered universal throughout the Untied States. Whether you’re looking to purchase your first home or are looking to refinance your current mortgage, the following information can help demystify this complex and confusing process.
Tip #1 – Have a Cosigner
If you don’t have a lot of income or your credit score is less-than-perfect, then you should seriously consider having a cosigner. In the most fundamental of senses, a cosigner is a third party who agrees to the terms of the loan alongside with you. If you decide to go this route, make sure you and your cosigner are fully aware of the legal and financial obligations this agreement requires. For example, if you aren’t able to pay your monthly mortgage payment, then not only is your credit score damaged, but also that of your cosigner. Because of this, it’s important to only go this route if you are confident you’ll never have an issue making your monthly mortgage payments.
Tip #2 – Wait It Out
While you may have a strong desire to own your home now, if your credit score or income isn’t where it should be, perhaps the most effective tip is to simply wait it out. While waiting, actively work on not only increasing your credit score, but also saving as much money as you can for your down payment and other expenses associated with being a homeowner. This is perhaps the most effective tip when it comes to securing a mortgage.
Tip #3 – Spend Less
If you just aren’t able to be approved for a large home loan, then you should consider spending less money by going with a cheaper property. While you may desire a large home in the best part of town, this just may not be feasible for you and your current financial situation. Instead of waiting it out, why not consider purchasing a less-expensive piece of property? This can allow you to obtain a mortgage at a better rate and have an affordable monthly payment.