Spring is just about here and many Fairbanks Alaska homebuyers will begin the process of applying for a mortgage. You may have started saving for a down payment, gone the extra step to get pre-approved and started shopping for Fairbanks properties, but that does not mean you are completely ready. Homebuyers tend to overlook certain aspects of homebuying in Alaska that can present a less than favorable application to a lender.
If you are planning to purchase a home in Fairbanks during the busy spring real estate season, consider these four reasons your mortgage application may not be ready to submit:
Poor Credit Score
Researching your credit score is one of the first steps to take in the homebuying process. With a low score, lenders will be reluctant to push through your mortgage application. If the lender does agree to work with you on a low score, your interest rate and the terms of the loan are two factors that could change— and not for the better.
But there are always ways to improve your credit score before buying a home in the Fairbanks area. Be sure to check your score for any errors and if found, take the time to correct them before applying for a mortgage. Also take care to pay down credit balances and make payments on time each month to allow your score to rise.
All lenders work with a debt-to-income ratio and homebuyers with a large amount of debt often are turned down. If you have a large amount of debt, it would be wise to begin paying the balances down or increasing your income so as to improve your DTI ratio before you begin your mortgage application.
Unrealistic Loan Expectations
When applying for a mortgage, it’s important to learn the difference between the amount of money you can borrow for a home in Alaska and the amount of money you should borrow. It is also smart for homebuyers to begin looking for properties online to see the types of homes available in their price range. An unrealistic idea of the size of mortgage you qualify for can be a downfall— try using a mortgage calculator to get a better feel for what you can actually afford in a monthly mortgage payment.
Lenders look upon a homebuyer’s employment situation when reviewing a mortgage application and any doubts could cause the application to be rejected. You must have enough income to cover a monthly mortgage payment, but also have the right type of income. For instance, if you are self-employed or work on commission, you must show that you have been profitable for at least two years. If you have gaps in your employment or your income is inconsistent, that could raise a red flag for your lender.
Before you begin the homebuying journey in Fairbanks, ensure that you have covered all of your bases and taken into account these four factors that could slow down the mortgage process. This spring, we’re certain you are eager to move into a new home and Madden Real Estate is here to help make your path to homeownership as smooth as possible.
Do not hesitate to contact us with any questions you might have! We look forward to hearing from you!