Tips on how to make yourself a better home loan candidate

Ellen Sinkey PHOTO CREDIT: Contributed

There are several factors that play into getting a mortgage. If you’re prepped upfront and plan accordingly, you should be on your way to enjoying your dream home.

But what’s the secret sauce in the prep and the planning? Keep reading to learn more.

Work on that credit score

The big question: What credit score do you need to buy a house? You could qualify for an FHA or VA (Veterans Affairs) loan with as little as a 580 score. For other loan types, like Conventional or USDA, you might be able to qualify with a 620-640 score. Start with credit repair if you’re not quite meeting the mark for these score ranges. A loan officer can help point you in the right direction. Tools, like the Credit Karma app, can assist with steps to improve your score based on your specific credit history.

Start saving for costs

Many are familiar with a down payment, but don’t realize other closing costs are involved when purchasing a home. Fees can include mortgage insurance, homeowner’s insurance, appraisal fees, property taxes and more. Several of these costs can be as little as 1% of the sales price, and some can be less than $100.

Be aware of a closing cost estimate and start saving ahead of time to put you in a good position to buy. A loan officer can assist you with a more concrete idea of how much you’ll spend in fees. In many areas, there are options for down payment assistance programs that provide money to go toward closing costs, so make sure to ask your loan officer about those.

Get your papers ready

One of the first questions you’ll get (after your credit score) is: “Do you have your documents handy?” This request includes personal and financial documents, such as your license or government-issued ID, a pay stub and recent W-2, tax returns and bank statements.

If you have any large deposits that aren’t from your normal paycheck, you might need a letter of explanation detailing where it came from. If you have generous family members planning to give money toward your purchase, you’ll need a letter for that as well. Your loan officer can offer you a template for these letters.

Be realistic

Don’t fall in love with a home until you know your budget. It’s great to have an idea of your dream home, but you might need to be flexible on some items. Finding a house with an extra room for a man cave or craft room might be what breaks your budget, or could just be unavailable in your market.

Get a mortgage pre-approval

Know what you can afford. Often, people are intimidated to start a conversation with a loan officer because it seems so official. There’s a sense that you’re committing to something and have to get all your ducks in a row. This isn’t necessarily true. A loan officer is available to help you determine how much home you can afford, with no commitment needed upfront.

With all your the steps taken care of, it’s time to find out how much of a house you can buy.

Why are you waiting? Time to get cranking on these items.