When to Consult a Mortgage Lender
Many would-be home buyers delay buying a home for a number of reasons including credit score, total income, and debt issues. While these problems may not be solvable overnight, it is never too early to talk to a lender. If you are a prospective home buyer, especially a first-time home buyer, meeting with a lender early can help you prepare for the home buying process and even learn some new strategies to put you a in a better position when you are ready to buy.
Pulling a credit report is one of the first steps in the mortgage qualification process. Lenders look at your credit score to determine your ability to repay the mortgage. People with less than perfect credit or other problems may be wary of shopping for a home because of their credit score. However, by looking at your credit report, the lender can determine what is impacting your borrowing power and where to begin credit repair. Financial experts usually recommend credit repair begin six months to one year before shopping for a home.
In addition to the credit report, lenders will also review paystubs, W-2s, and recent tax returns. Some renters may not be ready to transition into homeownership, because of affordability issues. Allowing a lender to review your total financial picture can help you determine how much you will need to make to offset the cost of a mortgage payment and property taxes, and where you stand with your current income.
One of the most commonly reported hurdles to homeownership is debt, specifically student loans. Renters feel they will get stuck in a cycle of long-term renters while simultaneously repaying debt and affording rising rents. This can prevent an additional challenge with saving for a down payment. Because of the pervasiveness of this issue, a lender can direct you to various programs designed to help indebted consumers afford a down payment and repay their debts. HomeFundItTM by CMG Financial is just one of the creative ways to help home buyers increase their down payment.
Owning a home is one of the first ways consumers start to build wealth. Homeowners help build strong communities and reinvest in the local economy. Would-be home buyers, especially first-time home buyers, should talk to a lender before they start shopping for a home to address any potential obstacles in advance.