What to Know About Yourself Before Applying for a Mortgage
Buying a home is a critical milestone in your life. However, the process for obtaining approval for a mortgage can be a long and complicated one. Therefore, it is important to assess ahead of time whether you are likely to be approved for a mortgage. If not, it is important to know what you need to do to get approval from a lender.
What’s Your Credit Score?
The first thing that you need to know before applying for a mortgage is your credit score. Generally, lenders want borrowers to have a credit score of 640 or higher. You can find out your score by applying for a copy of your credit report. It is possible to improve a score by paying down credit cards, taking care of missed payments and decreasing your debt-to-income (DTI) ratio.
What Is Your Debt-to-Income Ratio?
Simply put, your debt-to-income ratio tells you how much debt you have in relation to your total income. Let’s say that you made $5,000 a month and had monthly debt payments of $2,500. In this scenario, your DTI would be 50 percent. Ideally, lenders want applicants to have a DTI of 28 percent before a mortgage payment and 36 percent after the mortgage payment is factored in. However, lenders may be flexible about those requirements in some cases.
Lenders Will Show You How to Improve Your Borrower Profile
The best loan officers in Las Vegas understand that not everyone is ready to buy a home on their first attempt. However, they will try to teach you how to improve your credit score or other aspects of your borrower profile. In as little as a few months, an individual may be able to get past any roadblocks to obtaining a loan and buy the home that he or she has always wanted.