Why and how to get a mortgage checkup

An annual mortgage checkup may help maintain your financial health.

Why And How To Get A Mortgage Checkup

How often do you review your checking account transactions? Or your credit card purchases and payments? Probably weekly, or even daily. And you’re likely making adjustments based on your findings, moving more money into savings to spend later on vacation, for example, or making a bigger payment when you have some extra income.

A mortgage checkup helps you do the same thing for what’s probably one of the biggest elements of your financial life. Even doing something as small as changing your payment schedule can help you reach your financial goals.

How often should I have a mortgage checkup?

It’s good to hold a checkup with a mortgage professional at least once a year. Over time, your financial goals and life situation may change, and having a checkup at those key moments — even if they’re not on your regular annual schedule — is a great way to make sure that your mortgage still aligns with your current goals.

What does a checkup involve?

Your mortgage checkup will only take a few minutes and includes:

  • A review of your mortgage goals.
  • Discussion of any upcoming large purchases and how they impact your budget.
  • How your current mortgage stacks up in today’s interest rate environment.

A checkup can be even more helpful and relevant if you’re considering buying a new home or if you want to access the equity you have in your home.

All you need to bring to the checkup are your answers to questions about what you’d like to accomplish with your home financing and a rough timeline detailing when you’d like to accomplish it.

Your mortgage checkup can also be a great time for your mortgage professional to help you determine whether you’re eligible for any special offers for home borrowing. Certain benefits may be available to you based on your employer, union membership, or military service.

Do I have to make changes to my mortgage after the checkup?

Not necessarily. The checkup might show that the mortgage you already have fits your needs and goals. If that’s the case, you’ll have that reassurance that you’re on track until your next checkup.

Learn More: Determining Your Price Range

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One of the first questions many homebuyers ask is, how much can I afford?

Buying a home is one of the biggest financial decisions you’ll make, and you will want to stay within your budget.

Many factors affect the price range you should consider, including the size of your down payment and the loan amount you may qualify for, the types of loan options available to you, your current debts and credit history, and the property value of the home you are considering.

Your lender wants you to be a successful homeowner, and so to assess whether you qualify for a mortgage large enough for the home you want, he or she will consider your entire financial picture.

First, lenders want to know that you have a source of income to make monthly mortgage payments. Income can come from primary, secondary, and part-time jobs, as well as overtime, bonuses, and commissions.

You may use other sources of income if you want them considered for payment — including retirement or veteran’s benefits, disability payments, alimony, child support, and rental or investment income — provided they can be verified as stable, reliable, and likely to continue for at least three years.

Your lender will also examine your current debts, payment habits, credit history, and credit score. They want to confirm that you pay your bills, loans, credit cards and other debt on time and that you don’t have excessive levels of outstanding debt.

It’s a good idea to check your credit history and correct any problems before applying. You can get a free credit report annually at www.annualcreditreport.com.

Your lender will also review your assets and available funds to see if you have enough for a down payment and closing costs.

You may use funds from a savings account, certificate of deposit, investments, or retirement fund.

In some cases, you may be able to use a gift from a relative, friend, employer, or not-for-profit organization.

In many cases, you will also have to demonstrate that you have additional funds in your accounts to cover several months of mortgage, tax, and insurance payments.

And finally, your lender will look at the property itself to verify that it’s worth the purchase price.