What is the most important part of getting a mortgage? Being prepared ahead of time, that's what! If you go to a lender or broker with all of your paperwork ready and in order, you will have a much better chance of getting the loan you want and at a good interest rate. How do you prepare for the mortgage buying process?
First, get a copy of your credit report. You can order this online, and if you haven't gotten a copy of it already this year then you are entitled to get it for free. You need to know what your credit rating is in order to know what loan programs you can qualify for. Lenders will also run your credit anyway, and this costs them a fee which they pass on to you; if you can show them a recent copy of your report they will be very happy with you. You also need to look at your report to see if there are any errors so that you can contact the reporting agencies to have them removed or fixed. You can also pay the online service Lexington Law about $30 per month to scrub your credit for you, but if you use this service you should do so at least six months before you plan to apply for mortgages. The price is well worth it if you are serious about getting a mortgage.
You will also have to show the lenders your bank statements. They want you to be able to go back three years with these; if you can't do that, you should wait to get a house, as getting one without three years' of bank statements can be complicated and might involve needing a co-signer. Your bank probably has your statements online these days, but they will be happy to send them to you if you ask them. Lenders want to see that you make decent enough money on a steady basis to qualify for the loan you want. If you use online bill-pay, print out every single transaction you've done in the last three years. Note: if you have not been at the same job or working within the same industry for at least the last full year, you could have a hard time qualifying for a mortgage.
Now, the next step is tedious, but you need to get copies of all the utility bills (including your cell phone) and any payments on other loans that you've paid in the last three years. This includes canceled rent checks. If you have paid the rent in cash, get your landlord(s) to give you letter(s) saying that you don't owe any back-due rent. If you do, pay it off right away. Pay off any outstanding bills that are past due, as well. If you can't, you have no business shopping for a mortgage anyway.
When you talk to a lender, be able to show them statements on all of your assets, your pre-tax income, and your regular expenses outside of food, clothing, and gasoline for your car (any child support, current rent payments, utility payments, car loans, etc). If you are self-employed, you will likely have to take an alternative loan program with a somewhat higher interest rate. Have all of this information neatly organized in a folder when you apply for your mortgage.
First, get a copy of your credit report. You can order this online, and if you haven't gotten a copy of it already this year then you are entitled to get it for free. You need to know what your credit rating is in order to know what loan programs you can qualify for. Lenders will also run your credit anyway, and this costs them a fee which they pass on to you; if you can show them a recent copy of your report they will be very happy with you. You also need to look at your report to see if there are any errors so that you can contact the reporting agencies to have them removed or fixed. You can also pay the online service Lexington Law about $30 per month to scrub your credit for you, but if you use this service you should do so at least six months before you plan to apply for mortgages. The price is well worth it if you are serious about getting a mortgage.
You will also have to show the lenders your bank statements. They want you to be able to go back three years with these; if you can't do that, you should wait to get a house, as getting one without three years' of bank statements can be complicated and might involve needing a co-signer. Your bank probably has your statements online these days, but they will be happy to send them to you if you ask them. Lenders want to see that you make decent enough money on a steady basis to qualify for the loan you want. If you use online bill-pay, print out every single transaction you've done in the last three years. Note: if you have not been at the same job or working within the same industry for at least the last full year, you could have a hard time qualifying for a mortgage.
Now, the next step is tedious, but you need to get copies of all the utility bills (including your cell phone) and any payments on other loans that you've paid in the last three years. This includes canceled rent checks. If you have paid the rent in cash, get your landlord(s) to give you letter(s) saying that you don't owe any back-due rent. If you do, pay it off right away. Pay off any outstanding bills that are past due, as well. If you can't, you have no business shopping for a mortgage anyway.
When you talk to a lender, be able to show them statements on all of your assets, your pre-tax income, and your regular expenses outside of food, clothing, and gasoline for your car (any child support, current rent payments, utility payments, car loans, etc). If you are self-employed, you will likely have to take an alternative loan program with a somewhat higher interest rate. Have all of this information neatly organized in a folder when you apply for your mortgage.
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