So you’ve started the process of buying a home. Congratulations!
In this article, we’re going to give you a few tips on how to prepare yourself to meet with your mortgage lender. First, we’ll go over a few of the do’s, and then we’ll give you a list of the don’ts.
Getting Lender Ready: The Dos
Here is a list of things to do months beforehand, that will make a good impression on your lender.
- Check Your Credit Score: It is vital to know exactly where you stand before you even walk through the door. Typically, mortgage lenders will look at your middle FICO score as a big factor in calculating what your mortgage rate will end up being. Be sure to report any errors you find on your report.
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- Have 2-3 Lines of Credit: Most loans require you to have at least three lines of credit open and active within the past year or two. These could be credit cards, car loans, student loans, or a year’s worth of rent checks.
- Leave Accounts Open: Credit history carries a lot of weight, so your older lines of credit work in your favor. Don’t close these out just because you haven’t used them in a while.
- Avoid Opening New Accounts: Refrain from opening new lines of credit six months before starting the home buying process. This raises your DTI (debt-to-income) ratio, which most lenders see as a red flag.
Charge Less: Resist the urge to start making big purchases for your new home. This will also raise your DTI, which will directly affect things like your interest rate and your monthly mortgage payments.
NOTE: If during this process you find that your credit score needs some help, don’t worry– we’ve got you covered. Click here for our recommended (and secure) method of repairing your credit.)
Getting Lender Ready: The Donts
Now here is a list of things to avoid doing or saying to your lender, as they might come across as less than favorable.
- Anything Dishonest: Avoid giving misleading information or lying at all costs. Depending on when and where you do so, it could be mortgage fraud, which is a felony. If you have an issue, your lender can likely help you deal with it.
- How Much Can I Borrow?”: This gives the impression that you are uninformed about this process and haven’t done your research. If you feel like the amount they agree to is incorrect, bring up the subject but know your realistic limitations
- Admit to Absentmindedness: It will not sit well with a lender if you tell them that you sometimes forget to pay your bills. They have your credit report, so they may suspect it, but there is no reason to explain why.
- Changing Jobs: Lenders like stability, and your employment is no exception to that. Many mortgage loans require a minimum of two years at one job to even be considered. Lenders traditionally are also not as keen on non-salaried lines of work.
- Ask About Foreclosure: Avoid asking about what happens during a foreclosure process. While it seems like an innocent question on the surface, it may make the lender believe that it is a concern of yours, which might make it a concern for them as well.