Most of the time we don’t need large loans until we want to buy a car or go to college. A home loan is a whole different ball game however. If you’re aiming to secure a loan in the area of $150,000-$500,000 or more, there are certain items you should have in order before even attempting to get that loan.
1.) Check and Improve Your Credit Score- If you have perfect or great credit then that’s great and you can move on to item two. For money of us, mistakes we made in our late teens and early 20′s, with items like high interest credit cards or store cards at places like GAP haunt our credit reports to this day. Lingering high interest cards are difficult to pay off as so much of your monthly payments go to interest, especially if you’re making minimum payments. Pay all of these cards off before getting your mortgage application in and you are bound to get a more favorable rate.
2.) Have Your Down Payment Money Saved- This should include enough money for closing costs as well. Banks want to know that you have something in savings and that you can comfortably borrow money for a home. Savings shows discipline and responsibility. Unfortunately that’s a lesson so many of us learn only through extensive trial and error of credit card use.
Securing a mortgage is the end result of a process that requires prepping. Have an available line of credit and don’t be near your borrowing limit or your interest rate will likely be high as a result.