1. Clean up your credit.

Understanding your credit is key to securing a mortgage. Here’s how you can ensure your credit score is in great shape:

• Know your credit score: Before you meet with a lender, check your credit score. You can obtain a free credit report once a year online through annualcreditreport.com.
• Verify accuracy: Review your credit report for errors and dispute any discrepancies promptly. Unresolved disputes can lower your credit score and delay loan approval.
• Reduce high credit balances: Paying down your outstanding debts can have a positive impact on your credit score and help you secure a better interest rate.
• Set up payment plans: If you have delinquent credit lines, work with your creditors to create manageable payment plans that won’t negatively affect your debt-to-income ratio.

2. Become familiar with mortgage terminology.

Mortgages come with their unique language. Understanding these terms will make the process smoother. Explore our Mortgage Glossary to familiarize yourself with loan and mortgage terminology.

3. Establish your budget for the loan.

Determining how much house you can afford involves assessing your income and expenses, which should include:

• Monthly bills: Utilities, loans, and other regular expenses.
• Costs of living: Food, entertainment, and miscellaneous costs.
• Estimated property taxes, homeowner’s insurance, private mortgage insurance, and potential Homeowners Association fees.

Additionally, account for one-time expenses such as closing costs and your down payment.

4. Calculate your debt-to-income ratio (DTI).

Traditionally, lenders look for a DTI of less than 40%. You can improve your DTI by increasing your monthly income or reducing your monthly debt. Paying down open credit accounts is often the easier option.

5. Don’t choose a mortgage lender based solely on rate.

While saving on interest is essential, it’s equally important to work with a reputable lender offering a variety of loan products tailored to your needs. Learn about Smart Rate Lending’s history and expertise in the industry in our About Us section.

6. Get pre-approved, not just pre-qualified.

Understanding the difference between pre-qualification and pre-approval is crucial.

• Pre-qualification assesses your ability to repay a loan based on the information you provide.
• Pre-approval is a written commitment from a lender to extend a mortgage for a specific amount and time frame. It involves an analysis of your financial status and credit history. A pre-approval helps you set your budget, negotiate confidently, and close faster. It shows realtors and sellers that you’re ready to make a deal.

Contact your licensed Smart Rate Lending loan officer to discuss getting pre-approved today.

7. Choose your real estate agent wisely.

Select a real estate agent you can trust, who is experienced, and truly has your best interests at heart. Recommendations from friends and family who’ve gone through the home-buying process can be valuable. Avoid dual agents who represent both the buyer and seller, as this can lead to conflicts of interest. If you choose a dual agent, ensure it’s someone you have complete trust in.

8. Interview several agents before choosing one.

When interviewing agents, consider asking these questions:

• How long have you worked in real estate?
• Is this your full-time job?
• Have you sold homes in the area I’m interested in?
• How many total sales have you completed in the last year?
• Will you be present at the closing of my loan?

9. Location is everything.

Selecting the right neighborhood is crucial. Factors like safety, school ratings, your daily commute, and local amenities are all important. If parks, libraries, pools, sports arenas, churches, restaurants, or shopping centers matter to you, consider their proximity to your neighborhood.

10. Don’t make financial changes during the loan process.

Maintain stability in your finances during the loan application process. Avoid significant purchases, moving money around your accounts, or changing employers, as these factors can influence your loan qualification.

11. Get a home inspection.

Home inspections are not only important; in some cases, they’re required to understand a home’s condition fully. They can also be valuable for negotiations to potentially reduce the purchase price or add additional provisions to the contract.

12. Get all details in writing.

Throughout the buying process, sellers may make verbal commitments, such as promising to fix the roof or provide kitchen appliances. Ensure these assurances are documented in written agreements. If it’s not in the contract, there’s no obligation for the seller to follow through. This applies to the details of your loan as well, including the loan amount, payments, rate lock, and other specifics. Make sure everything is clearly stated in signed documents.