5 Must-Dos Before Applying for a Mortgage
Have you finally decided to buy a home in Fairbanks? Congratulations! Homeownership is one of the most rewarding experiences you’ll have during your lifetime. As you probably know, along with the pride in owning a home comes a long-term commitment and a laundry list of financial responsibilities. Before you can own a piece of the Alaskan real estate market, you’ll need to prepare for and get approved for a mortgage. To ensure your mortgage application process goes as smoothly as possible, review my list of to-dos to improve your chances of getting approved for a home loan on your future Alaskan abode.
1. Check your credit reports
Lenders determine your credit score by taking the median of all three credit reports. An error on just one of them can have a negative impact on your mortgage rate, so it’s important to clear those up before applying.
2. Report inaccurate information
It can take anywhere from one to two months to resolve errors on your credit reports. Having inaccurate information on your credit reports can get your application denied, so this step is crucial.
3. Square away delinquent accounts
Lenders want to feel confident that you will be able to pay your mortgage on time every month. Outstanding accounts and overdue bills need to be paid off before going through the mortgage application process.
4. Minimize your debt-to-income ratio
If you have a staggering amount of debt, a lender will question your ability to make mortgage payments. Your monthly debt payments should be no more than 12% of your income, lower if possible.
5. Don’t make any new major purchases
Refrain from making a big purchase at least six months before applying for a mortgage. Lenders look at “credit inquiries” to see if you may be about to take on new debt that hasn’t yet been reported.
Even if you already have great credit, taking these steps to clean up your credit report will increase your chances of getting approved for a mortgage at a rate you’ll be happy with. As mortgage rates are still at historic lows, now is a great time to start organizing your finances in preparation for buying a home in Fairbanks.
Once you decide to begin the home buying process in earnest, please reach out to us. At Madden Real Estate, our team of Buyer Specialists are knowledgeable about the latest financing information, are experts in writing contracts and negotiating home purchases and repairs, and can give you a unique perspective on the Alaskan real estate market. We look forward to connecting with you!
Wes Madden, CEO/Broker
Madden Real Estate
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