Pensacola is a beautiful city in Florida with many wonderful homes for sale. If you are looking to purchase a home in Pensacola, you will likely need to apply for a mortgage. It will also give you an advantage when making an offer on a home, as sellers are more likely to accept an offer from a pre-approved buyer.
5 Steps to Get Pre-approved for a Mortgage in Pensacola
1. Check Your Credit Score
Your credit score is a major factor that lenders use to determine whether or not to approve your mortgage application. Make sure to check your credit score and address any negative marks on your report before you apply.
2. Save for a Down Payment
Most lenders require a down payment of at least 20% of the purchase price. The more you can save, the better your chances of getting approved and the lower your monthly payments will be.
3. Gather Necessary Documentation
Lenders will require a variety of documents, such as pay stubs, tax returns, and bank statements, to approve your mortgage application. Make sure you have all of these documents ready and organized before you apply.
4. Shop Around for the Best Rate
Different lenders offer different mortgage rates and terms. It’s important to shop around and compare rates from multiple lenders to find the best deal for you.
5. Work with a Local Lender
Working with a local lender who is familiar with the real estate market in Pensacola can be beneficial. They will have a better understanding of the local economy and housing market and can offer you personalized advice and guidance throughout the mortgage process.
By following these best practices, you will increase your chances of getting approved for a mortgage in Pensacola and finding the perfect home.
After Getting Pre-approved
It’s important to avoid certain actions that can negatively impact your credit score or financial situation. Although it’s tempting to begin planning for your move and envisioning the decor of your new home, exercise caution when making significant purchases. To help ensure the success of your home loan application, here are a few things you should avoid after submitting.
Be Cautious with Cash Deposits
When it comes to sourcing your money, lenders prefer traceable sources. Before depositing any significant amounts of cash, discuss the proper documentation of your transactions with your loan officer.
Avoid Large Purchases
Not just home-related expenses but any large purchases can raise red flags for lenders. New debt increases your debt-to-income ratio, making the loan riskier for lenders and potentially jeopardizing your mortgage approval. Refrain from making any big purchases, including for furniture or appliances. Avoid making large purchases, such as buying a car or taking a big trip, as this can increase your debt-to-income ratio and make it more difficult to get approved for a mortgage.
Don’t Change Jobs
Lenders like to see stability in your employment and income, so try to avoid changing jobs or quitting your job before you close on your mortgage.
Maintain Consistent Bank Accounts
Lenders need to track and source your assets, and consistency among your accounts makes this easier. Before transferring any funds, consult with your loan officer.
Opening New Credit Accounts
Opening new credit accounts or taking on additional debt can also hurt your credit score and impact your ability to get approved for a mortgage. Regardless of whether it’s a credit card or a car loan, applying for new credit can impact your FICO® score, as it generates a credit report pull from multiple financial channels. Lower credit scores can affect your mortgage interest rate and eligibility for approval.
Don’t Close Any Credit Accounts
Despite the common belief, having fewer credit accounts does not necessarily make you a safer candidate for approval. Your credit history and utilization of credit as a percentage of available credit both contribute to your credit score, and closing accounts can negatively impact both.
Co-signing on Loans
Co-signing a loan makes you accountable for its repayment, leading to a higher debt-to-income ratio. Even if you do not make the payments, your lender will still factor them into your credit report.
Paying Bills Late
Late payments on any of your bills can hurt your credit score, so make sure to pay all of your bills on time, including credit cards, car loans, and student loans.
The Bottom Line
To ensure your home purchase goes smoothly, it’s important to be mindful of your financial decisions after applying for a mortgage. By avoiding these actions, you can help maintain your good credit standing and increase your chances of getting approved for a mortgage in Pensacola.
Be open and transparent with your lender about any changes in your income, assets, or credit. If you have recently changed jobs or employment status, let your lender know. It’s always best to fully disclose and discuss your financial plans with your loan officer before taking any action.
Your home purchase should be a stress-free experience. Before making any large purchases, transferring funds, or making major life changes, talk to your lender for guidance on how these actions may affect your home loan.
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