If you are looking to downsize your home, refinance your current loan, or tap into your equity to help fund your retirement, it is important to know that no one is ever too old to apply for a mortgage. Age is not a factor that loan providers consider during the application process. In fact, it would be unethical for mortgage providers to discriminate in that way. However, there are some things you should know before you apply for a mortgage no matter what your age.
Mortgage Myths Debunked
The mortgage application process can be overwhelming and confusing. This is probably why there are some myths about the process that continue to prevail. Here is the truth about the main mortgage myths.
Prequalification means preapproval. A prequalification is not the same as a preapproval. However, prequalifying for a mortgage is a good way to know what your house-buying budget is. It is also helpful in creating a relationship with a lender. A preapproval is a next step in the mortgage application process. A lender will take a much more comprehensive look at your financial situation during the preapproval process. Thus, when you are serious about buying a home, it is best to have a preapproval done.
You need a perfect credit rating for a mortgage. The truth is that the higher your credit score, the more leverage you have with lenders. However, even if your credit rating is not over 800, you can still get a mortgage. There are also some other things you can do to secure the loan, such as have a cosigner or make a larger down payment. If your credit rating is particularly low, you may want to spend some time boosting it by paying down your debt or getting a good record of paying your bills on time.
You’ll never get a loan if you have debt. While carrying debt can impact things like the interest rate for your mortgage, it won’t prevent you from getting approved for one. The reality is that the amount of debt you have can impact your approval and the interest rate you’ll be paying. Lenders do look at your debt-to-income ratio during the approval process. What that means is if your income is high enough for you to take on more debt, you should be approved for a mortgage. However, if your debt is higher than your income, lenders won’t be willing to add mortgage debt to your current situation. If you do have a high debt-to-income ratio, you should aim to find ways to pay off your debt quickly.
No matter how old you are, you can still get an approval for a mortgage. So, if you want to downsize, refinance, or access your current home’s equity, there is no need to be afraid of the mortgage application process.
If you are interested in learning more about mortgages, call Northwood Mortgage™ at 888-492-3690 or contact us here.