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There are many perspectives when it comes to how long getting a mortgage takes. Many articles read that it doesn’t take as long as you think, just one to three days! Some articles warn that it’s a many month process toward reaching the final goal. Having seen everything in-between, it can easily be said that you never know just how long it will take.
For buyers who have planned ahead, done any credit repair work that needed to be done (i.e. not zeroed out any self-employed tax returns for two years or saved for a downpayment) then the process will be smooth as silk! But truthfully, that is rarely the case. Many individuals don’t find out that this kind of effort is necessary until after their initial meeting with a loan officer.
The spring market is fast-paced and sometimes pre-qualification letters aren’t enough to out-compete another bidder. In a seller’s market, like the current Richmond market, many sellers won’t entertain offers without a pre-approval letter, meaning your credit and income have been verified.
So if you missed out on this spring market, take the opportunity during the "slower" real estate months of summer to get your financial house in order and broaden your mortgage options.
The larger your down payment, the wider your mortgage options.
Adjust your debt-to-income ratio
Get your credit card balances down as low as you can, or consider consolidating debts into one low monthly payment the bank know is achievable along with a mortgage payment.
Don't borrow any more money
Don’t buy a new car when applying for a loan. Don’t take out a loan on something else while applying for a loan. Don’t stretch your credit so thin that the bank questions your repayment ability, okay?
Student Loans won't stop you
“Almost 60 percent of first-time homebuyers said that student loans delayed their saving for a down payment” according to the National Association of Realtors. Having that debt is commonplace and won’t necessarily prevent you from getting a mortgage as long as you’ve managed it wisely.
Many mortgage lenders are willing to give mortgages to individuals with a credit score of at least 620, depending on their financial history. If your credit is less than perfect, remember that it is only one part of a whole equation. However, if your score is in need of an overhaul here are some general credit rebuilding tips:
- Look at your credit report for any past due accounts or late payments. If you have accounts, like a student loan payment, that is 90 days or more overdue, pay those off first. Accounts that are 60 to 30 days late will have a less negative impact than accounts that are 90 days or more late.
- If your credit report is showing that an old bill is unpaid, you should not pay it unless you are able to pay it back in full. A partial payment may make the debt more relevant, which can hurt your credit score.
- Lenders will see that you have been making an effort to pay off overdue accounts and reduce your existing debt. This will bring your credit score up and help improve your chances of qualifying for a mortgage.