12 Things to Do Before You Apply for a Mortgage
A month of preparation can change the rate you are offered. Here is what to do with that month.
Lenders price a loan on what they see the day you apply: your credit, your debts, your savings and your paperwork. Each of those can be improved, but only before the application, not during it.
1. Pull your credit reports
You can get your reports free from each of the three bureaus through the federally authorised site. Look for accounts you don't recognise, wrong late payments and old balances that should be closed.
Check personal information as well as accounts — wrong addresses or names can point to mixed files. Note any collections, even small medical or utility ones, and ask a lender how they would be treated.
2. Dispute errors early
Corrections can take weeks. Start disputes as soon as you find them, and keep the confirmation letters for your lender.
3. Pay down revolving balances
How much of your card limits you are using affects your score. Paying balances down before the statement closes can help your score quickly.
If you can't pay a card off entirely, spreading payments to lower each card's utilisation can help. Don't close the paid-off cards — the available credit helps your ratio.
4. Don't open or close credit accounts
New accounts mean hard inquiries and new payments; closing old ones can shorten your history and raise your utilisation. Hold steady until after closing.
5. Work out your debt-to-income ratio
Add up your monthly debt payments and divide by gross monthly income. That ratio, with the new housing payment added, is one of the main approval tests. See debt-to-income ratio.
Use gross monthly income, before taxes. Include car loans, student loans, minimum card payments and any child support you pay. Lenders set their own limits by program.
6. Season your savings
Lenders want to see where your down payment came from, usually through recent bank statements. Keep the money in place and avoid large unexplained deposits.
Cash kept at home and then deposited is hard to document. If you have money in several accounts, ask your lender whether to consolidate it now or leave it where it is.
7. Plan any gift funds properly
If family is helping, the lender will typically need a gift letter and proof of the transfer. Ask your lender how they want it documented before money moves.
8. Gather your documents
Recent pay stubs, two years of W-2s or tax returns, bank statements, ID, and paperwork for any other income. See the full mortgage document list.
9. Hold off on a job change if you can
Lenders like stable income history. A move to a similar salaried job in the same field is usually fine; a switch to commission or self-employment can complicate approval. Talk to a lender first.
10. Check down payment assistance eligibility
Some programs have income limits, homebuyer education requirements, or must be set up before you sign a contract. Ask lenders which programs they offer. See down payment assistance in Georgia.
11. Decide your real budget
Pick a monthly payment you are comfortable with — including taxes, insurance and any HOA — and shop to that, not to the maximum approval.
Use realistic estimates for Georgia property taxes, insurance and any HOA fees — they can add a substantial amount to the monthly payment, especially in some counties and communities.
12. Compare more than one lender
Request Loan Estimates from several lenders within a short window; credit scoring models generally treat multiple mortgage inquiries in a short period as one. Compare quotes on Veribas Financing.
Compare the rate, points, lender fees and the total cash to close. The cheapest offer depends on how long you expect to keep the loan.
Then apply
Once you are pre-approved, keep everything steady — job, accounts, balances — until the day you close. Lenders commonly re-verify employment and credit just before funding.
Common questions
How far in advance should I prepare to apply for a mortgage?
One to three months gives time to fix report errors and pay down balances. Even two weeks of preparation helps.
Does shopping for a mortgage hurt my credit?
Multiple mortgage inquiries in a short window are generally treated as one for scoring. Do your rate shopping within a few weeks.
What credit score do I need?
It depends on the loan program and lender. See credit score to buy a house.
Can I get pre-approved with student loans?
Yes. The lender counts the monthly payment in your debt-to-income ratio; how an income-driven or deferred payment is counted varies by program.
Read next
General information for Georgia home buyers, not legal, tax or lending advice. Loan programs, rates, limits, tax rates and insurance terms are set by lenders, agencies, counties and insurers and change — confirm current figures with them, and have your closing attorney review anything you sign.