Getting a mortgage can be a significant challenge for many people, says lending expert, Eliseo Delgado Jr. People often don’t know how to handle their debt, he says, which is why he created these simple tips to make this process much easier.
Balance Your Credit Score
One tip Eliseo Delgado Jr. has suggested for his clients is to get their credit scores in order before trying out for a mortgage. Lenders typically want somebody who has a rating of at least 680 because a mortgage is a much more serious loan than even an auto loan. Therefore, lenders take it much more seriously, which is why Eliseo Delgado Jr. suggests handling credit problems right away.
He suggests that you pay all of your bills on time to ensure that you don’t get a lower credit score. Beyond that, he also states that decreasing your credit usage is critical. Credit usage is how much of a loan or line of credit that you use. For example, if you have a $2,000 credit card with a debt of $1,500, you have a usage of 75 percent. Delgado suggests that borrowers keep this rate as low as possible to get the best mortgage.
Avoid New Debt
Connected to balancing your credit score, Eliseo Delgado Jr. also suggests avoiding new types of debt before asking for a mortgage. Remember, he says: your lenders take a look at your debt-to-income ratio when deciding on a loan. And if they find that this ratio is going to be too high for you to tolerate, they may end up denying your loan or asking for a higher interest rate.
Eliseo Delgado Jr. suggests that you keep your debt payments – including all of your mortgage payments – below 36 percent of your gross monthly income. A gross monthly income, he states, is the amount of money you make after taxes. If you find that your ratio is too high, try to pay off as much debt as you can to avoid higher interest rates, Eliseo Delgado Jr. says.
Eliseo Delgado Jr. Suggests Researching Beneficial Mortgage Lenders
Lastly, Eliseo Delgado Jr. suggests that you do your research before reaching out to a mortgage lender. There are many different possibilities from which you can choose, each of which has advantages and disadvantages. For example, Eliseo Delgado Jr. states that commercial lenders are not a good choice for homeowners or those who may want to invest in industrial facilities.
Just as importantly, Eliseo Delgado Jr. states how important it is to work with lenders whom your agent trusts. There are some terrible lenders out there, Delgado says, and your real estate agent will know who they are in your area. So make sure to pay attention to them to ensure that you get the best results, Eliseo Delgado Jr. says.