Tips for Arranging Your Finances Before Applying for a Mortgage
Buying a home is a big financial step. Applying for a mortgage requires organization of your personal accounts before you’re ready discuss a loan with your credit union . By ensuring that your finances and credit are in good standing before you apply for a mortgage, you will improve your chances of getting the best rate possible on your home.
While you don’t need to be debt-free to secure a great mortgage, take a look at your current finances and decide which debts can be paid off to improve your credit and financial stability. Credit card debt is a good place to start when you’re looking to eliminate overspending. By minimizing or eliminating this source of debt, you are teaching yourself financial responsibility in preparation for the many additional costs that accompany home ownership.
Obtain and Improve Credit Information
Before you think about buying a new home, obtain a free credit report. Check your report thoroughly for mistakes or problem areas, such as accounts or credit cards that aren’t yours. Address these issues immediately, as errors on your credit report can earn you a higher interest rate on your mortgage. Additionally, check your FICO credit scores and find out how to improve them. A better credit score often translates directly into a better rate on your mortgage.
Save Your Down Payment
The more you’re able to put down initially on your home, the better. A larger down payment means you’ll need to borrow less for your mortgage and you’ll have more options for financing. Start saving as early as possible by eliminating small money sinks such as eating out, unwatched cable TV subscriptions, or that daily latte on your way to work.
Are you ready to take the first step in new home ownership with a mortgage from GCS Credit Union? We are here to help—just call us at (618) 797-7993 to get started! You can find more information about applying for a mortgage and other tips and financial advice on our blog.