5 Things you Should do Before Applying for a Mortgage
3 minute read
April 28, 2014


mortgage savingsYou know that you want to buy a house, and in order to do so you’ll need to apply for a mortgage. Beyond that you really aren’t sure where to start. Here’s a list of 5 things you should do BEFORE you apply for a mortgage.


1- Save enough money for downpayment/ closing costs. 

This almost goes without saying. It costs money to purchase a house. There are down payments required and closing costs associated with your mortgage loan. You should have saved the money for your downpayment and closing costs before applying for a mortgage. A lender will access your financial standing at the time of your application and take account for any hypothetical future savings that will be done before you purchase a house.

2- Build strong credit history.

Your credit report serves as a track record of how you can handle financial obligations. Since mortgages are such a large amount of money being borrowed a lender will want to see how you paid  your credit obligations in the past. It is advisable to build your credit history with various types of credit, such as installment loans and revolving accounts. Your length of credit history, usage of credit and timeliness of payments will all be analyzed as well.

3- Establish a stable employment history. 

Most lenders like to see at least 2 years of work history in the same employment field at the time of application. If that employment history is with the same employer that looks even better. This is not to say that you can’t get approved without 2 years of work history, but employment longevity and stability will look much better than a string of jobs that lasted for 6 months in different occupations.

4- Build a healthy savings account. 

Yes, more savings! While you should have the money for downpayment and closing costs saved up, it is advisable for you to have additional savings beyond that. Most lenders do not feel comfortable with borrowers leaving the closing table with all of their savings wiped out. Additionally, many loans require applicants to have a certain amount of money in reserves to meet eligibility for the loan. A good recommendation would be to save about 2-6 months worth of mortgage payments before applying for a loan.

5- Minimize debt. 

Established a strong credit history is important, however, you don’t want to have too many credit obligations. Having too many monthly obligations will increase your debt to income ratio. A higher debt to income ratio can lower the amount of mortgage loan you are approved for or it can make you ineligible all together for a loan.


Take these 5 recommendations into account when you are planning on applying for a mortgage. Remember that these things should be arranged before applying for a mortgage. Having these items taken care of will assure that you will find a mortgage with competitive rates and that the type of home you are hoping for.

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