Top 3 Things to Know Before Applying for Your Mortgage
It is important to be prepared once you begin the home buying process. Having all your financial documents organized and making sure you have enough money saved is vital in becoming a homeowner.
So now that you have decided to take the plunge into homeownership, your local Newnan Mortgage Lender has listed the top three things you need to know before applying for a mortgage.
Tip #1: Credit Score
Your credit score makes a huge impact on the type of Newnan mortgage you will be able to qualify for. If you have a poor credit score, don’t let that deter you from applying for a mortgage. There are government-backed loans, such as an FHA loan, that has a minimum credit score as low as 580.
It is also important to know that the higher your score is, the better the rate you could receive on your mortgage. So, try to raise your credit score as much as possible before beginning the application process.
Tip #2: Debt-To-Income Ratio
Your Newnan mortgage lender will also want to know what your debt-to-income ratio is. This is the difference between your gross income and the amount of debt you have. Knowing this amount will tell the lender how risky of a borrower you are and how likely you are to pay back your loan.
Tip #3: Down Payment
Another important thing you need to know before applying for a mortgage is what is expected of you when you find the home of your dreams. This includes having to make a down payment on your house. If you pay less than 20% of your down payment, your lender will require you to pay for private mortgage insurance. This fee is to ensure the lender is covered if you default on your mortgage.
Try to save as much as you can for your down payment to prevent additional fees. Also, the more you pay towards this payment, the better rates you might receive on your Newnan mortgage.
If you would like to receive more information on things to know before you apply for a mortgage, please contact Jeff Wilmoth with Homestar Financial at 404-597-5662.