You found your dream home (or at least a home you’re happy enough with to buy, and your offer was accepted!). Now comes the next step. Getting a mortgage.
We live in a world in which timing is everything, so, an important question to ask is, when is the best time to apply for a mortgage?
In a previous article, How to Apply for a Mortgage, we provided an overview of the common things you’ll need to apply for a mortgage and how to do it.
It is a common thought that when you have enough money, and you meet all the requirements for purchasing a house, such as financial stability, you should apply for a mortgage loan. However, that is not always the case.
You may benefit from trying to time when you are going to buy a house. In fact, there may even be certain days, weeks, and months that are better (and worse) for purchasing a house.
Today, we will share with you tips and insights to find the optimal time to purchase a mortgage and house.
When is the Best Time to Apply for a Mortgage?
The ideal time to meet with a mortgage lender is usually at the beginning of the month. The first week of the month is when mortgage lenders approve the most applications. The middle of the month is often when they gather all of the paperwork needed to finish the process.
Although the time of the month has no bearing on your chances of getting a loan approved, it helps ensure that you select a mortgage lender who can meet your demands and guide you through the process appropriately. And, as said earlier, the time of the month is not the end-all of the best time to apply for a mortgage loan.
Factors that Affect your Mortgage Loan Application
The best time to apply for a mortgage loan is affected by many factors. And they have more to do with your financial situation than days of the week or time of the month.
Below we’ll cover the 3 major factors you want to have in order before you apply for a mortgage: credit score, amount of income, and amount of down payment below.
Credit Score
A report from the three distinct credit reporting organizations is used to determine credit scores. Your credit score will range from 300 to 850 points. The closer your credit score is to 850, the more likely you are to get approved for a mortgage. And the more favorable terms you’ll be able to get.
People with credit ratings under 580 will have a hard time finding a lender willing to lend to them. The good thing about credit scores, however, is that they are not set in stone.
Your credit score is likely to change month to month depending on your present debt status and whether or not you have and use credit cards. If you want to apply for a mortgage but don’t yet have a very good or excellent credit score, there are several things you may do to improve it.
The biggest one is to focus on paying off your debt if you have a lot of it.
Get a copy of your credit score and take action to improve it to make sure the moment is perfect for applying for a mortgage.
Amount Of Income
Mortgage lenders consider your present income when determining whether you can afford your mortgage. They also look at your earning history to ensure that you will have a consistent stream of income throughout the term of the loan.
You are less likely to get authorized if you haven’t been at your current work for at least two years. Lenders will want to see at least two years of self-employment revenue if they are self-employed.
Having a history of consistent income has an impact on not only whether you’ll qualify for a mortgage but also whether you’ll be able to afford it. It also has an impact on how much house you can afford to buy.
Amount Of Down Payment
A minimal down payment is required for the majority of house mortgages. Keep in mind that the more money you put down, the lower your monthly mortgage payments will be. If you put down less than 20%, you’ll almost certainly have to pay mortgage insurance.
Save your money until you can pay at least 20% of the cost of your new house upfront to get the best terms and affordable monthly payments.
Bottom Line
Once you have your credit score in good shape, have a consistent level of income and can put 20% or more down for your home, that is generally going to be the best time to apply for your mortgage.