Five Easy Steps to Getting Your Mortgage

Mortgages are not as easy to qualify for as they were in past decades. There are tighter restrictions, changes to debt-to-income ratios, and new lending regulations that lead to more mortgage denials. There are five easy steps you can follow to ensure your application is approved.

Check Your Credit Report Before You Apply

Approval of a mortgage in Texas weighs heavily on your credit report. When there are mistakes, it can take three months before corrections are reflected in the reports issued by Equifax, Experian, and TransUnion.

Three or four months before you apply for a mortgage, order copies of all three credit reports from the government. Once a year, you are entitled to a free credit report from AnnualCreditReport.com. Carefully look them over for errors, late payments, or accounts that have been sent to collections. This is the official government site, so do not be fooled by sites that charge you for information.

If you find mistakes, follow the directions on the site for reporting errors. The credit bureaus need time to research your claim, get the company involved to acknowledge it is an error, and then submit the correction. Common mistakes include accounts that belong to an ex or someone with a similar name, identity theft, or late payments that were not actually late.

Be Honest With Your Lender or Mortgage Broker

If you know you have less than stellar credit, be honest. Your lender or mortgage broker will try to work with you to help come up with a way you can have your new home in Austin, Texas. This may mean using an ARM instead of a fixed-rate mortgage, raising your down payment, or requiring someone to co-sign the mortgage with you.

Have Realistic Expectations When Choosing a New Home

Because mortgage companies want to see your mortgage payment, home insurance, and property taxes that are no more than 28% of your monthly income, look for a home that makes this possible. A bigger home may seem more appealing, but it might not be the smartest choice in terms of financial limitations.

Keep on Top of Requests

It's common for your mortgage lender or broker to ask for additional paperwork when you apply for a mortgage. Be prepared to scan and email, fax, or mail copies of your tax returns, paycheck stubs, bank statements, real estate contracts, and inspection reports. Your mortgage will not progress until these items are in your lender's hand, so make sure you send them promptly and call or email to verify it was, in fact, received.

Carefully Read Over Paperwork

After you submit a loan application, you will receive a flood of paperwork. Make sure you look over this paperwork carefully for errors. You also want to know what fees you face in order to obtain the mortgage. Fees vary from bank to mortgage broker or credit union to financing firm. You will be responsible for credit reports, real estate appraisals, home inspections, origination fees, legal fees, title searches, and points.

If there are things you do not understand when looking over this paperwork, ask before you sign anything. The good faith estimate is especially important as it breaks down the total cost of obtaining the mortgage, including all of the fees and interest charges over the life of your loan.