When You Should Wait to Apply for a Mortgage
3 minute read
April 3, 2014


mortgage applicationMany people feel the pressure of buying a home before they are really ready to do so. While buying a home is a very exciting time for anyone, it can quickly become stressful if you are not financially prepared. Here’s a list of reasons when you should wait to apply for a mortgage.


You Need to Lower Your Debt and Raise Your Credit Score. 

It is wise to lower your debt and raise your credit score before applying a mortgage.  Having minimal debt can raise your credit score and lower you debt to income ratio. Your lender will look at your debt to income ratio to determine how much of a mortgage payment you can afford. The higher your credit score is the lower your interest can be on your mortgage.


You Need to Save a Larger Down Payment

Having a larger down payment may qualify you for a lower interest rate and help you to avoid paying for mortgage insurance. Ultimately this can help you save hundreds of thousands of dollars over the life of your loan. It can also allow you to afford a larger home. The larger your downpayment is, the greater your budget can be.


Your Employment is Unstable

If you are on a temporary contract at work, or if you are concerned about being laid off  as a  result of downsizing, it may be best to wait until you feel more secure in your job before applying for a loan. Furthermore, job stability is something that your lender will look at to determine if you are eligible for a mortgage loan.


You Don’t Have Money for Closing Costs

Many first time buyers forget about the expense of closing costs when buying a loan. On average closing costs are about % of the home sales price. While you can negotiate for the sellers to pay for some of the closing costs it is not guaranteed. Being able to pay for closing costs on your own may open up more opportunities in available houses. Additionally, you may be able to outbid another buyer by not asking for closing cost assistance.


While you don’t need to have every single one of these items in perfect standing before applying for a mortgage, it is advisable that you try to get as best a grasp on your finances as possible. Saving money, lowering debt and securing stable employment will allow you to seem credit worth to a lender. Being financially responsible will show a lender that you are prepared for the commitment of a mortgage. Take heed to the advice above before going to your lender to fill out a mortgage application.

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