5 Tips to Make Your 2016 Mortgage Loan Application a Success

Home ownership is a milestone that many young people eagerly anticipate, but there are a lot of obstacles to overcome between finding your dream home and moving in. Successfully applying for a mortgage is probably the biggest, most daunting step for most people.

Here’s how to make the mortgage approval process an easy one.

1. Save, save, save!

In order to get approved for a home loan, you’ll need to have a down payment. The ideal down payment is 20% of the cost of the home, but many buyers have less. Many lenders will approve an application with as little as 3% down. However, you should strive to have a down payment worth closer to 20%. Not only will this lower the cost of your monthly payments, but will also improve the odds of your application being approved.

2. Review your credit report.

Before you apply for a mortgage, arm yourself with knowledge. Get a free credit report so that you know what information your potential lender is going to find out when he or she checks your credit history. If you haven’t made a habit of checking your credit score on a regular basis, you may be surprised at what you find – for better or worse. If your score is excellent, you can rest assured that your mortgage application will have a greater chance of success.

If your score isn’t what you hoped it would be, all is not lost. Take a look at the information that appears on your credit report. You may find major inaccuracies, and you can spend some time disputing these (and cleaning up your credit history) before you waste time applying for a mortgage.

3. Do your research.

A mortgage isn’t one-size-fits-all. Before you apply, take some time to research your options and decide which type of loan best fits your circumstances. Consider how long you plan on living in your new home. If you plan to raise your family there, a fixed rate loan for 30+ years may offer the most benefits. If you are buying a starter home and intend to move once you start a family, an adjustable rate mortgage with a low interest rate for the first few years may be the way to go.

4. Consult the experts.

This is another time when being a part of a credit union can be extremely helpful. As a member, you can talk to lending counselors who have your best interests in mind. Instead of pressuring you to take on more than you can afford, our lending experts will help you find the right mortgage and the best rate for your situation. Our success is your success.

5. Save some more!

In addition to a down payment, you’ll also need to pay closing costs when you sign your mortgage. These fees vary and some can be negotiated, but you should be prepared to cover them. In addition, it’s important to have some money left in your savings account after your down payment and closing costs have been paid. Home ownership can come with expensive, unexpected surprises, and it’s important to be prepared. Experts recommend keeping enough money to cover three to six months’ worth of household expenses in your savings account in case of an emergency.

Once you’re ready to meet the above conditions, go ahead and file for a preapproved mortgage loan. Then you can start enjoying the search for your dream home!