// 512 892 9473

Home » Blog » Blog » 3 Important Credit Considerations Before You Apply For A Mortgage

3 Important Credit Considerations Before You Apply For A Mortgage

by Goodlife on April 30, 2014

Before applying for a mortgage, borrowers need to build a plan for how they are going to manage their credit both going into the mortgage process and as they navigate through it. Lenders like to know that borrowers have a strong likelihood of repaying the loans they take out and, as such, look carefully at an applicant’s credit.


Here are three must-dos that can help an applicant turn into a homeowner.

Pre-Checking Credit Reports
Before even starting the home loan application process, borrowers are well served to check their own credit reports and see what appears. If everything is correct, their credit score can help them understand what type of loans are open to them and what they might cost. When errors come up, pre-checking gives the applicant time to have the errors corrected before applying for a loan. When an applicant has credit issues, knowing gives him time to fix them. He can pay down balances, add new lines to his report or take other action in advance of applying.

Manage The Debt To Income Ratio
Mortgage lenders calculate a borrower’s ability to borrow based on the debt-to-income ratio. They add up the proposed mortgage payment and the other debt payments and divide them into his monthly gross income. If a borrower has too much debt or not enough income they won’t get the loan. To manage this, borrowers have two choices. One is to earn more by taking on a second job. The other is to have lower payments. Paying down credit cards can be a quick way to solve this problem.

Avoid Taking On New Debt
When an applicant takes on more debt while applying for a home loan, it can cause three problems:

  1. The inquiry can drop his credit score.
  2. The payments can change a (DTI) Debt-to-Income ratio.
  3. The lender might not feel good about a borrower taking on more debt.
Getting a mortgage can be tough. The key is to understand what lenders want to see and give it to them. If you need help understanding credit and how to prepare for your mortgage transaction, contact us today 512-582-7878 or request a free consultation.

   


Gena Caudle
GoodLife Mortgage – Residential Mortgage Broker

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post:

Recent Posts

    February 26, 2015

    COMING SOON! | 19412 Melwas Way Pflugerville, TX 78660

    View the Tour Plenty of room for everyone with great schools nearby!! Walk to Riojas Elementary! Large 5 bed home with 3 full baths, game room, and lots of storage. Ready for move in with fresh paint and carpets cleaned! Granite counters, double vanity in master and upstairs bath, and water softener. Save over $50k when compared

    February 26, 2015

    5 Common Reasons Why an Austin Home Sale May Fail

    The ups and downs of selling a home are some of the most extreme emotions you’ll ever experience. Of course, it’s all worth it when the home sells, but what if it doesn’t? Here are five common reasons why a home sale fails and tips for avoiding them. Commitment Issues Buyer’s remorse is a very real phenomenon.