A Few Points to Consider Before Applying for a Mortgage

Updated: May 27, 2019

You’ve finally reached the point in your life when you can afford to buy a home. The prospect is as exciting as it is scary. It’s a whole new phase of life with new responsibilities and commitments. One of the most important decisions you’re going to make in relation to your new home is the mortgage, probably the most long lasting, impactful loan you will ever make.

Like so much else in life a little homework and pre-planning can make the difference between the right mortgage for you and the wrong one.

Know your credit score

Before you set out to get the biggest loan of your life you’d best check your credit score. That will determine your interest rate, which will directly impact your payments, by hundreds of dollars a month.

If your credit score is low, check out our blog on increasing your credit score. Essentially, ensure you’re making all your payments on time. Spend below 30% of your limit on credit cards. Pay down credit cards with balance and think about a balance transfer to free up credit. Once you improve your score shop for your mortgage rates within 30 days. Spreading out inquiries can hurt your score.

Reduce your debt-to-income ratio

Your debt to income ratio is the percentage of your monthly gross income that goes toward paying debts. The higher that percentage the more debt you have. Since applicants with a lower ratio will have an easier time making monthly mortgage repayments, lenders prefer them.

Shop for the best mortgage

Mortgages vary in terms of fees, interest rates and terms. Check out these 5 Tips for Finding the Best Mortgage Lenders from Nerdwallet.


You may not see the benefit of getting yourself preapproved prior to beginning your house hunt, but that process will help you in manifold ways. From Investopedia’s 5 Things You Need to be Pre-approved for a Mortgage, “First, you have an opportunity to discuss loan options and budgeting with the lender. Second, the lender will check your credit and alert you to any problems. Third you will learn the maximum amount you can borrow, which will give you an idea of your price range.”

Plus, house hunting competition is fierce out there. If you find yourself bidding against other home buyers, the seller will generally go with people with pre-approved letters.

Don’t take on more debt

You’ve been approved for the mortgage, now to make the perfect life picture complete you think it would be a good idea to get that new car. Don’t. The mortgage lender is monitoring your finances through closing to ensure you aren’t a risky borrower. That means they’re watching for increased debt. Wait until you’ve closed to buy new furniture. Get settled in your new payment schedule before adding more to it.

Okay you’ve done your homework. Now go out and find that home!

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