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5 Things to Do Before Applying for a Mortgage

July 14, 2017

5 Things to Do Before Applying for a Mortgage

Buying a home is one of the biggest financial decisions we make, and getting approval for a mortgage is one of the biggest steps toward owning a home. But where do you start? The options and information can be overwhelming, so we talked to James Hinton, Origin’s chief mortgage officer, about the top five recommendations for improving your chances of mortgage approval.

  1. Get your credit in tip-top shape. Your credit is crucial when buying a house. Research and understand the actions that might improve your score. In the period before applying for a mortgage, pay down your balances. Avoid making large purchases on credit. Don’t co-sign on other loans. Your creditworthiness should be as attractive as possible for the best chance at approval.

  2. Be prepared to explain your financial history. Nobody is perfect, so be willing to acknowledge things that will raise red flags – taking on a significant amount of debt, leaving bills unpaid, etc. Be prepared to explain why each one is out of character or how you’ve rectified the situation. Lenders look for signs that you might not be reliable in paying your mortgage, but they also understand you’re human. If you can provide a reasonable explanation, lenders are likely to be understanding.

  3. Determine how much you can afford to spend on a house. If you don’t currently keep track of spending and stick to a budget, now is the time you should start. Before applying for a mortgage, determine how much you can reasonably spend on a home. Origin offers an online calculator to help. Once you know how much you can spend, it’s much easier to search for a house that fits your needs and your budget.

  4. Ask yourself how long you plan to live in your house. This is an important question when applying for a mortgage. The interest rate on an adjustable-rate mortgage is usually low for an initial period before it increases or becomes uncertain. If you plan to live in your house for a relatively short time before moving again, an adjustable rate might be best. If you plan on staying for the long-term, a fixed-rate mortgage can remove much of the financial guesswork.

  5. Save as much as possible for your down payment. This makes a huge difference for a number of reasons. A bigger down payment improves your ability to get approved. It also allows you to get a better interest rate, and helps you to avoid the need for private mortgage insurance. All it takes is a little discipline. Put aside a little more in savings and you’ll reap long-term rewards.


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