Get Approved For Your First Mortgage

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Jimmy Sgambelluri

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Article written by:  Jimmy Sgambelluri
October 23, 2017

Here are some of the best steps you should take before purchasing your first home.

1.  Determine your mortgage budget.

Before ever speaking with a mortgage officer, you'll want to determine how much of a house payment you are comfortable paying. A good rule is that your total housing payment (including fees, taxes, and insurance) should be no more than 40 percent of your gross (pre-tax) income.

Sometimes it can be difficult to equate this monthly payment to a fixed home price, as your monthly housing payment is subject to variables like mortgage interest rate, property taxes, the cost of home insurance and private mortgage insurance (PMI), and any condo or association fees.

2.  Figure out how much you can save for a down payment. 

Determine how much you can save for a down payment to put towards your first home. In today's market, expect the best terms with a 25% down payment and perfect credit, unless you're getting an FHA loan or another special program loan.

If you have it, consider putting 20 percent down to avoid private mortgage insurance (PMI)-- costly insurance that protects your mortgage lender should you foreclose prior to building sufficient equity in the property.

3.  Give your credit health a checkup. 

Before applying for a mortgage, You'll want to verify there are no errors on the report or recent derogatory items like late payments. You obtain both your credit score and your credit history report from a local mortgage lender.

As for your credit score, your estimated FICO credit score should be at least 680 and preferably above 700.  Anything less and you may need to find a highly-qualified cosigner or take time to improve your credit before getting mortgage approval.  The lower your credit score, the higher the mortgage rate you'll pay.

If your credit is just under 680, you may consider an FHA loan.  These government-insured loans allow lower credit scores and much lower down payments, but there are significant additional costs.

4.  Meet with a mortgage lender and get pre-qualified at any time.

A pre-qual simply means the lender thinks that, based on your credit score, income, and other factors, you should be able to get approved for a mortgage. They will also check if you qualify for any special programs such as a Virginia Housing mortgage loan.  It's informal and totally non-binding.

Wherever you go, this pre-approval isn't binding, but it's a formal( ish) indicator of your ability to get approved for a mortgage.

Commit to the maximum you want to spend before beginning the mortgage approval process and stick to it.

Before completing a mortgage application or even strolling through an open house, you'll want to know these things:

  • Your monthly income.
  • How much cash you can put down.
  • Your credit score and any credit issues in the past few years.
  • The sum of your total monthly debt payments (auto loans, student loans, and credit card minimum payments).

Mortgage lenders tightened their fists after the recession, but it's still possible for young buyers to get approved for a mortgage.

As the U.S. economy continues to rebuild from the recession that was almost nine years ago, lots of people are looking to buy homes after years of renting or staying put in a previous house.

As a result, the real estate market is competitive in many parts of the country, requiring buyers to put in aggressive offers and, in some places, compete with deep-pocketed investors paying cash.

What this means is that-- now more than ever-- you need to be qualified for a mortgage before you shop for real estate.

Getting approved for the mortgage you want is all about staying within certain ratios your mortgage lender or mortgage broker will use to determine how much you can afford for a mortgage payment. Large debt payments (like an auto loan or big student loans) will limit the size of the mortgage approval you can get.

Even as the real estate market begins to recover, the mortgage crisis has left its mark. It means that proving to the bank that you're financially prepared for a mortgage is more important than ever.

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About the Author

Hi, I am Jimmy Sgambelluri, a mortgage loan officer with an undeniable commitment to providing simplicity and clarity to the mortgage process.

You will find that I truly enjoy helping consumers and real estate agents navigate the mortgage maze.

As a Virginia based mortgage professional with over 20 years lending experience, I can help simplify the mortgage process for your family.

When you need somebody with integrity, deep expertise, & resources in the mortgage industry you have found the right person.

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