How To Prepare Financially to Apply for a Mortgage | Stellar Finance Group Don’t make these common mistakes when applying for a mortgage: not checking your credit score, not having enough money saved for a down payment, not understanding the different types of mortgages, and not getting pre-approved for a mortgage.
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⚫ Job stability: Lenders want to see that you have a stable job with a steady income. If you have been in your current job for at least two years, that is usually considered to be a good sign. If you have recently started a new job, you may still be able to qualify for a mortgage, but you may need to provide additional documentation to show that your job is stable.
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⚫ Job history: Lenders will also look at your job history. They want to see that you have a history of consistent employment. If you have had a lot of job changes in the past, that could be a red flag for lenders.
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⚫ Income: Lenders will want to see that you have enough income to afford the monthly mortgage payments. They will typically calculate your debt-to-income ratio, which is the percentage of your monthly income that goes towards debt payments. A good rule of thumb is to keep your debt-to-income ratio below 36%.
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⚫ Debt: Lenders will also look at your debt load. They want to see that you have a manageable amount of debt and that you are able to make your monthly payments on time. If you have a lot of debt, it could make it harder to qualify for a mortgage or could result in a higher interest rate.
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⚫ Credit: Your credit score is another important factor that lenders will consider. A good credit score will help you get approved for a mortgage with a lower interest rate.
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⚫ Save for a down payment. A down payment is the amount of money you put down when you buy a home. The larger your down payment, the lower your monthly mortgage payments will be. A good rule of thumb is to save for a down payment of at least 20% of the purchase price of the home.
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