“Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.
Bankrate is always editorially independent. While we adhere to strict , this post may contain references to products from our partners. Heres an explanation for . Our is to ensure everything we publish is objective, accurate and trustworthy. Bankrate logo
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
Getting a mortgage can be an exciting yet stressful process. While you likely started preparing many months in advance, the final month leading up to your closing date is critical. Here are some important things you should do in the final weeks before getting a mortgage:
Review Your Finances
-
Double check your credit score and report Request a copy of your credit report and scan it for any errors Dispute any inaccuracies with the credit bureaus. Maintaining a strong credit score will help ensure you get the best mortgage rate.
-
Avoid taking on new debt. Lenders will check your credit right before closing, so avoid applying for new credit cards or loans. Large purchases could also impact your debt-to-income ratio.
-
Verify your down payment funds. Confirm you have the full down payment amount in your account. Lenders may ask for updated bank statements at closing.
-
Don’t make any big purchases. Hold off on large purchases like cars, appliances, or furniture until after closing. Major purchases could raise red flags with underwriters.
Get Organized
-
Gather documents. Compile bank statements, tax returns, pay stubs, and any other paperwork required by your lender. This will make the underwriting process smoother.
-
Create moving folders. Get files or binders to keep all your mortgage paperwork organized. This will make the signing process easier.
-
Prepare for closing costs. Closing costs average 3-5% of your loan amount. Have funds ready to cover the down payment, fees, prepaid interest, and escrow payments.
-
Book movers and cleaners. If moving, book professional movers and cleaners for move-in/move-out dates. Confirm dates line up with the closing timeline.
Communicate with Your Lender
-
Tell them about job changes Inform your lender immediately if you switch jobs Employment gaps could impact loan approval. Provide an offer letter from the new employer.
-
Disclose major account transfers. Let your loan officer know if you move your down payment to another bank account. Large withdrawals or deposits should be explained.
-
Ask about rate locks. Decide whether to lock your interest rate or float it until closing. Locking in guards against rate increases.
-
Review final loan estimates. Compare the final Loan Estimate and Closing Disclosure forms to the initial ones. Ask the lender to explain any discrepancies.
Prepare Your Property
If purchasing:
-
Schedule a final walkthrough. Do a final walkthrough 1-2 days before closing to ensure repairs were completed and the property is in the agreed-upon condition.
-
Change utilities to your name. Contact utility companies to transfer electric, gas, water, internet over to your name starting on the ownership date.
-
Update insurance. Notify your insurance company about the change in property ownership and provide them with mortgage company details to have them listed on the policy.
If refinancing:
-
Consider an appraisal waiver. Ask your lender if you qualify to waive the appraisal, which will speed up the process and save you money. Recent sales activity for your home can stand in place of an appraisal.
-
Inspect your home. Do a thorough inspection inside and outside your home to identify any repairs needed before the appraiser visits. Tackle minor fixes like leaky faucets, damaged walls, lawn care.
No matter what type of mortgage, keep your loan officer informed throughout the process. Getting preapproved early and meticulously preparing in the final weeks will help ensure a smooth closing. Maintaining open communication with your lender and staying organized will give you greater peace of mind leading up to your mortgage closing date.
What financial elements are considered in the mortgage process?
How do you know you’re really ready for a mortgage? There are some signs that might point to yes, according to Freddie Mac. These include:
- Your credit score: One of the biggest determining factors for mortgage approval is credit score. A credit score of 661 or higher places you in the creditworthy category, according to Freddie Mac. If your score is between 600 and 660, you could be close to being ready for a mortgage but not quite there yet. If your score is 599 or lower, you’re likely not ready to take on the additional debt.
- Your debt-to-income (DTI) ratio: DTI is also significant, and there are two measures. The front-end ratio, which compares your projected monthly mortgage obligation to your monthly income, should be, ideally, 25 percent or less. The back-end ratio — your overall debt, including auto loans and student loans, can be higher, but most lenders like it to be no more than 36 percent, with 43 percent as the max.
- No bankruptcies/foreclosures: Your credit profile should be free of these blemishes for at least seven years.
- Timely debt payments: Your credit report should also be free of debt payments that are 90 days or more overdue.
Lightbulb Icon
Bankrate’s take: This isn’t to say you won’t get approved for a mortgage if you have a lower credit score or don’t meet all of the other criteria — you just might be stretching yourself too thin or unable to achieve other financial goals.
How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.
- Improving your finances before applying for a mortgage gives you the best shot at getting good terms.
- In evaluating your creditworthiness, lenders consider your credit score, income and other assets, debts, the amount of your debts in relation to your income, and your employment history.
- Improving your credit score, reducing your debt load and ramping up your savings can boost your financial profile.
As a first-time homebuyer, you might have little income or savings to work with. That doesn’t mean you won’t qualify for a mortgage, however. Here are three ways to prepare your finances before you apply for a home loan.
Home Mortgages 101 (For First Time Home Buyers)
FAQ
Is it good to be a month ahead on mortgage?
Here are some reasons to consider paying off your mortgage ahead of schedule: You want to save on interest: By making extra principal payments, you’ll shorten the time it takes to repay the loan, saving money on interest.
What is the 3 7 3 rule in mortgage?
What to do before you get a mortgage?
- Preparing to shop. Get your money situation in order. Assess Your Spending. Figure out how much you want to spend. Determine Your Down Payment. Decide How Much You Want to Spend. Consider whether it’s the right time for you to buy. …
- Exploring loan choices.
- Choosing a loan offer.
- Closing on your new home.
How much income do you need to be approved for a $400,000 mortgage?
Using this method, you may be able to afford a $400,000 home if your household income is $100,000 or more. Another rule of thumb is the 28% rule: According to this method of calculating what you can afford, you should spend no more than 28% of your gross monthly income on your housing payment.