Whether you’re a first time or seasoned home buyer, the process of qualifying for a mortgage for your East valley home can be stressful which is why we offer these tips:
Monitor Your Credit
Even if you’re not ready to purchase a home in the next year, it’s a good idea to monitor your credit. That way changes or identity theft can be addressed as soon as possible, having little impact on your credit or your ability to secure a mortgage. The last thing I’d want for you as your real estate agent, is to have a credit issue hold up the closing on your home.
- Pull your credit reports annually from all three credit reporting agencies for FREE using annualcreditreport.com.
- Monitor your credit monthly for FREE using creditkarma.com.
Debt to Income Ratio
When you apply for a mortgage for your East valley home, the lender will require a loan application, proof of income, and debts. In addition to an extensive review of your finances, they will also review your credit history to be sure your debt to income ratio is within an allowable amount to approve your mortgage.
Debt to income ratio (DTI) is a percentage of your total minimum monthly debt divided by gross monthly income. The DTI calculator assumes your current housing expenses will be applied to your new home and that you only have one mortgage.
No Established Credit
Many first time homebuyers have little to no established credit. That doesn’t mean you can’t purchase a home. It means we have to get a bit creative in showing the lender that you have a payment history.
- Cancelled checks for rent, utilities, and other recurring obligations that aren’t reflected on a credit report.
- Origin of the down payment such as a gift from a relative. Send a copy of the gift check and gift letter with the loan application. The letter must state it is a gift and doesn’t need to be repaid
- Secured credit card or credit builder savings accounts will help establish your credit as they show payments over a period of time. These payments are reported to credit reporting agencies helping to establish your credit.
Qualifying for a mortgage doesn’t have to be stressful. With a bit of planning and the right documents submitted with your loan application, you will be well on your way to being a home owner.