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8 Steps to Qualifying for Your First Mortgage

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This is an excerpt from our eBook, Which Mortgage is Best for You. Get the full eBook for FREE. Download here.


Lenders look at many aspects of your finances when you apply for a mortgage. So you’ll want your finances to be in good shape when the time comes for you to apply. To help you along, Mountain America Credit Union has put together this handy list of eight tips to help you qualify for your first mortgage.


Follow these first four tips in the months before you apply for a mortgage to improve your chances of qualifying and maximize the amount you can borrow:
 

1.    Avoid new debt and pay down existing debt.

You will qualify to borrow more because your debt- to-income ratio will be lower. You’ll also improve your credit score.


2.    Save, save, save.
Having a down payment can make your loan less expensive and make it easier to qualify, as can having ample cash reserves in the bank.

  
3.    Stay employed and stay in the same line of work.

You may not be able to control whether you get laid off from a job, but you can control whether you quit or switch fields. Lenders like to see that you’ve been consistently employed in the same field for 12 to 24 months or longer, so do whatever you can to make that happen. Don’t take a yearlong hiatus to “find yourself” or to travel if you want to buy a home soon.


4.    Don’t miss any payments.
On-time loan and credit card payments are the most important factor in your credit score. Not being late is a good way to increase your credit score.


Once you’ve applied and are in the process of being approved, there are several things you need to do to make sure you don’t jeopardize your loan. Follow the next four tips to ensure your mortgage application process goes smoothly:


5.    Don’t apply for any other loans or open any credit card accounts.
Applying for a credit card or loan will lower your credit score for a few months and taking on more debt will reduce how much you can borrow for your home.


6.    Don’t make any major purchases.
Whether you pay with cash or credit, a major purchase will hurt your loan eligibility by reducing your cash reserves or increasing your debt.


7.    Stick to your payment schedules.
Continue making all payments on time, since it’s so important for your credit score.


8.    Stay in your job.
During the approval process, it’s still important to stay at your job if you can help it. Don’t move to a different line of work or leave a salaried job to take a commissioned job. Your approval could fall through because your source of income will no longer be considered stable and reliable.


Want to learn more about how lenders decide whether you qualify for a mortgage? Check out our new eBook, Which Mortgage is Best for You. This eBook will show you:
 

  • Important financial questions to ask yourself before buying a home.

  • The pros and cons behind the most common mortgage products available today.

  • How lenders determine if you qualify for a mortgage.


Learn valuable information to help you make the best home financing decisions. 


Download my eBook

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