Three Financial Steps to Take Before Applying for a Mortgage

Buying a home is one of the largest financial decisions most people make. Preparing early can help you qualify more easily and avoid surprises during the mortgage process.

First, review your credit—but don’t assume you need perfect credit. A mortgage professional can identify which changes may have the greatest impact. Avoid opening new accounts, financing a vehicle or closing older credit cards before applying without first discussing it with your lender.

Second, build a realistic homebuying budget. Your total housing expense may include the mortgage payment, property taxes, homeowners insurance and, for many Honolulu condominium buyers, monthly maintenance fees. It is also wise to maintain savings for repairs and unexpected expenses after closing.

Third, organize your financial documents. Recent pay statements, bank statements, tax returns and documentation of other income may be needed. Self-employed borrowers, veterans, investors and buyers with significant assets may have additional financing options, so don’t automatically assume a traditional mortgage is your only choice.

The best time to speak with a mortgage lender is before you begin making offers. An early financing review can help you understand your purchasing power, compare loan options and correct potential issues before they affect a transaction.

Steven Penske is a Honolulu mortgage lender at Rate with more than 20 years of experience. He specializes in VA loans, Honolulu condominium financing, conventional and jumbo mortgages, and financing solutions for self-employed borrowers and real estate investors. NMLS #379410.