So, everyone should know how important getting preapproved for a mortgage is. It benefits both you and your lender: you know exactly how much you’ll be able to afford, and they know exactly what they’re getting into when working with you. But, exactly how do they decide how much you’ll be allowed? This post at the Mint blog sheds some light on the process. Here’s what lenders look at:
-Your debt-to-income ratio- can you pay your mortgage and your current debts?
-Credit considerations- your payment history is one of the most important elements in getting approved.
-Down payment requirements- how much cash do you have on hand?
-The big picture- if you’re lacking in some areas, but make up for it in others, you have a better chance.
Buying a house takes planning. Clean up your credit score, pay off other debt, and save up enough for a down payment and closing costs before even applying.