Author: GoBankingRates
Spend Wisely Before Applying for a Mortgage
You want to look as good as possible to potential mortgage lenders, so don’t do anything to jeopardize your chances of both getting a loan in general and a competitive rate. Before deciding whether you’ll be approved, mortgage lenders will review absolutely everything about your finances — including recent spending activity.
“Don’t make major credit card purchases in the months before applying for a mortgage,” said Ralph Herrera, a senior real estate advisor at Engel & Völkers, based in Atlanta.
The reason for this is two-fold, as both your credit utilization ratio and debt-to-income ratio can take a hit with a major purchase.
Your credit utilization ratio refers to the total amount of credit you have versus the available balance. This directly affects your credit score.
Your debt-to-income ratio is the amount of money you owe, in relation to your earnings. This is a key factor when deciding whether to grant you a mortgage.
Choose Your Lender Wisely
If you think it doesn’t matter which lender carries your mortgage, you’re mistaken.
“Your mortgage lender matters, [so] shop around and compare costs [versus] benefits,” Herrera said. “A good Realtor will be able to recommend mortgage bankers and brokers.”
This was also published on Yahoo! Finance, AOL, and Verified News Explorer.
