Choosing to buy a house is a big decision whether you’re a first time home buyer or a seasoned home buying veteran. But before you find the perfect home, you need to talk with a mortgage broker and figure out if you’re a financially viable candidate for a home loan with a mortgage lender. Only a lender can tell you if you’re a viable candidate and if a mortgage could be approved, however, there are plenty of questions to consider before sitting down with a mortgage broker in Santa Fe in order to see if you’re financially ready to jump into home ownership. Take a look at the following factors that can affect your ability to get a mortgage once you’ve found your dream home.
You and your spouse’s work histories are a very important factor whenever you’re looking to apply for a mortgage. Ideally, you will want to have been at the same job for a least a year and once again, ideally, you will be salaried. Now this isn’t always the case and you can still get a mortgage loan if you don’t meet these factors. If you are in a commission based position, you will need to have more than a year, preferably several years, of work history at your current pay in order to be deemed a financially sound investment by a broker or bank. Additionally, being in the same position for at least a year when you’re salaried isn’t a hard and fast rule, just a suggestion, since it is one of many different factors evaluated during the mortgage application process.
Income to Debt Ratio
Take time to evaluate your personal income to debt ratio before you go in to speak with a mortgage broker. Do you have a lot of loans you’re paying off? Do you have a lower pay but have a car loan? Do you have a great income but TONS of student debt? There are plenty of factors that can affect your income to debt ratio that a mortgage broker will look at. The main point is that a loan originator will want to see that you have income available in order to make your mortgage payments and that debt will not make this prohibitive. Now it’s important to note that student debt will not always be a major factor. In some cases, student debt specifically will not be judged as heavily as things like credit card debt or other types of loans.
Your credit score is a very important factor when applying for a home loan. Take the time to get a free credit report or look up your score on CreditKarma.com in order to be educated about where you stand and why. Your credit score is affected by many different financial transactions from paying rent to when companies do background checks when hiring. If you are planning to buy a home within a year or two, there are many things involving good financial habits that you can do to improve your credit score before you apply for a mortgage.
It’s important to have a good grasp on your entire financial situation. Understanding your regular monthly expenses and what other extra or surprise expenses could occur is important. When you’re applying for a mortgage, you want to try and keep any extra expenses under control in order to give a mortgage broker a good and consistent snapshot of your finances. Plan ahead where you can in order to manage any surprise expenses appropriately during the mortgage application process.
Be prepared for the mortgage application process before your go out and find your dream home. Let Berkshire Hathaway HomeService in Santa Fe help connect you to helpful mortgage brokers in the area.