When you are looking to get a home there are a few things that you can do that will really prepare you for the home buying process. One of those things is to talk with a mortgage broker. The mortgage broker is going to be one of the individuals that helps you to get the loan. The mortgage broker is essentially the middle man between you and the bank. Before you start shopping around for homes it is going to be very beneficial to talk to a mortgage broker and become pre-qualified for a home. Here are a few things you should know about becoming pre-qualified for a home.
Credit Is Key
One of the first things that re mortgage brokers are going to do is check your credit. Taking out a home loan is a very big deal and they want to know if you are going to be able to pay back the loan, and pay it back properly. A bank lending you the money for a home is taking a risk on you, but it is a calculated risk. The higher your credit score the lower risk you are for the bank. So, if you have a high credit score then you are considered a less risky borrower. This is going to save you a lot of money in the long run because with good credit you are going to get a lower interest rate on your home. If you have a low credit score then be ready for a very high interest rate on your home. If you do have low credit, you should start working on repairing it as soon as you can. Often there will be mistakes on the report that can be challenged. it is important to challenge these inaccurate items correctly. So, there are credit repair companies that can help you with this.
Debt To Income
You will need to provide the mortgage broker with your last two years tax returns, W2's, and the last couple months worth of pay stubs. The broker is going to look into how financially stable you actually are. They want to make sure that you will be making enough money to pay for the home. If you are going to be doing a 15 year fixed rate loan then your debt to income ratio can't be over 43% and the ratios change with each different loan, and from bank to bank. Once they see your income they will be able to calculate all your fixed expenses and then calculate how large a loan they can offer you.