When you begin shopping for a home, getting your finances in place is a crucial step that shows sellers you’re serious about your offer. Applying for a mortgage loan is different from renting an apartment or getting a car loan, and you’ll need to do more legwork to get approved. Magnolia Bank of Hodgenville and Elizabethtown, KY, has helped many first-time buyers through the process and is here with some useful advice for you.

These local bank experts recommend understanding and following these tips to have the most success with your mortgage loan application.

Five Mortgage Loan Application Tips

1. Understand Your Credit Score

Your credit score has a huge effect on the approval of your mortgage loan. Frequently late or missed payments and a low score are just two issues that can keep you from getting approved are. Problems with your credit score could indicate that your mortgage loan would be too high of a risk for the bank. To avoid complications, stay on top of your credit. Pay your bills on time and consistently evaluate your credit report for any errors that may have occurred.

2. Save Your Money

The fastest way to have your loan application rejected is to go to the lender with no money. You’ll need to have a down payment saved up to show the bank that you’re ready to buy – and to pay back your loan. The amount you’ll need to save depends on the type of loan you choose and the price of the house. It can range anywhere from three percent of the sales price, all the way up to 20%. 

3. Don’t Quit Your Job

A local bank will rely on your employment to determine whether or not they want to lend you money. Any change to your employment status or the status of your income can halt or delay the application process. If you’re a freelancer, be prepared to show that you’ve earned a steady income over the past two years.

4. Avoid New Debt

Your local bank will look through your finances to evaluate your spending habits and your prior financial obligation to make sure you can pay your monthly mortgage payment. They’ll be wary if you have too many other loans under your name, so don’t take out apply for any car or personal loans before you attempt to move forward with a mortgage.

5. Save Your Paperwork

Mortgage banking requires a lot of documentation, so hold onto any recent bank statements, pay stubs, and tax paperwork. It can take a while to gather everything you need, so work on your loan application ahead of time, so you’re ready when the right house comes onto the market.

To learn more about getting the right mortgage loan for your needs, call Magnolia Bank at (270) 358-3183. You can also visit their website to learn more.