When you’re ready to buy a home and break away from the cycle of renting, it’s time to think about how to quality for a mortgage loan in Denver CO. However, qualifying for a mortgage is no longer as simple as it once was. After the housing crisis in 2008, lenders have tightened up their requirements for potential homeowners. If you’re feeling a little apprehensive about the process, follow these tips to quality for a mortgage loan in Denver Colorado.
Repair and Build Your Credit Score
When you’re preparing for the process purchasing your first home, it’s important to think about your credit score as early as possible. Your credit is vital in securing a favorable interest rate, and it can have a big impact on your monthly payment if you apply for a loan with a poor credit score. As soon as you realize that you’re interested in applying for a mortgage loan in Denver CO, use a free credit reporting site like Credit Karma or Credit Sesame to take a look at your current credit history. If your score is below 700, spend some time paying down debt and disputing derogatory marks.
Find and Organize Documents
Before you set foot in a lending office, you’ll need to have all of your documents on hand. To simplify the process and present the best case, find your most recent paystubs and two years of income taxes. Your lender will want to see that you’re prepared and know what to expect when it comes to purchasing a home, and coming into the meeting with all of the necessary documents is an easy way to show that you’ve done your research and put thought into the process.
Set Realistic Expectations
When you’re ready to start shopping for a home, your lender will ask how much you’re hoping to qualify for. Before you meet with a lender for a mortgage loan in Denver CO, take a look at a few online mortgage calculators to get a general idea of what home prices you can afford. Some calculators are quite accurate and can give you an excellent idea of what you can expect to qualify for based on your debt to income ratio.
Save For a Down Payment
While the typical mortgage company likes to see a down payment of at least 20 percent, there are plenty of other options available for first-time homebuyers. As the prices of homes across the country are on the rise, it’s impossible for most potential buyers to save up 20 percent of the total cost. When you’re ready to purchase a home and stop renting, don’t be deterred by the old advice of saving up 20 percent. If you’re interested in buying a home in a rural area, you might even be able to qualify for a USDA loan with a zero percent down payment. This type of loan is hard to find, but it’s generally easy to find anFHA loan with a down payment requirement of only three percent. If you or your spouse have served in the military, then you might be eligible for even more incentives and assistance in buying your first home.