San Diego Real Estate Blog

A new study shows more than 70% of Americans feel getting a mortgage today is a serious national problem. Since the housing markets fall has had such a huge impact on our economy, it’s really not  a shock that lenders have gone back to “old ways” of doing loans, ie…you actually have to show your income, not just state you make X amount of $$$ on your application.
Before stated income, many borrowers felt what they say they are feeling today, high levels of stress, confusion and frustration. In fact, 20.9% of the people surveyed said they felt waiting to hear if they had an approved mortgage loan was more stressful than finding out if they landed a new job.

There are several things you can do to make this process less stressful and significantly improve your chances of getting approved-

• Pay down your debt as much as you can before applying for a mortgage.
Lenders calculate the ratio of your debt to your income to determine how much you can afford to borrow. Your total debt-to-income is based on how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees.
• Clean up your credit long before you apply for a mortgage.
Credit is critical today, not just to get a mortgage but to get the best terms. A marginal credit score can cost you tens of thousands of dollars over the life of the loan. Pull one or all of your three annual credit reports and check yourself, before you wreck yourself.
You’ll have to pay a nominal fee of $10 to $15 to each credit bureau — Equifax, Experian and TransUnion — to get your credit score. Review your report for errors and omissions.
• Don’t make a major purchase on credit and don’t apply for new credit before you apply for a mortgage or at any point before your mortgage closes. Purchases and credit accounts increase your debt and hurt your debt-to-income ratio.
• Increase your down payment. The more you put down the better your rate and your chances at scoring on that loan application. If you can’t increase your money down, buy a cheaper home. Now is not the time to stretch.
• Get all your docs in a row before you apply for a mortgage. Don’t waste time or raise the ire of lenders who are tougher than ever on documentation for income, assets, financial obligations and more. When you apply, have your paperwork ready.
• Know and prepare for your cash requirements. Cash expenses, beyond the down payment can crush you. Closings costs are on the rise. They can include transfer taxes, lenders fees, title insurance, escrow, settlement and home inspection costs. Also upfront property taxes, homeowner association dues homeowner insurance and other costs could come due before you close.
Get a Realtor that will negotiate tough. Ask for a purchase price lower than the value. A lower price serves both you by lowering your loan-to-value ratio and your lender, by reducing its risk.

If you would like a complete checklist of what you need for qualifying for a mortgage as well as purchasing your new home, email me at Rob@Robdennyhomes.com and I will send you the most detailed home buying packet there is out there with no obligation or cost to you.