For first-time homebuyers, applying for a mortgage requires buyers to obtain several financial documents promptly. Mortgage companies require a stable credit history, a good credit score, proof of income or check stubs, tax returns, bank statements, photo ID, and most importantly a down payment. A pre-approved mortgage leads first-time buyers one step closer to mortgage approval. All financial details must be in pristine condition prior to filling out a mortgage application. Additionally, the finances must remain sportless during application processing, pre-approval, and approval.

Here are a few tips you should know before applying for a mortgage:

1. Know your affordability

Cloud nine dreams cannot turn an unaffordable home into an affordable one. Come down to earth and plant realistic roots. Decide an affordable loan amount that your finances can cover. Increase the amount to include interest rates and a down payment. Set some money aside for closing costs, home inspection costs, home maintenance, property taxes, and home insurance costs. The right answer requires intense research on interest rates for the amount desired from several lending companies. Use a mortgage calculator or a home affordability calculator can be helpful for creating your budget.

2. Purge credit history

The three credit bureaus, Equifax, Experian, and TransUnion, keep tabs on everyone’s credit history and buyers can obtain a free copy each year. Grab a copy from each bureau and examine your personal history. Contact the bureau responsible for inaccurate charges, typos, or errors and clear those discrepancies up before applying for a mortgage.

3. Lower debt

The ideal financial situation is to have zero debt. The realistic goal is to pay off debt until there’s less than 20%-30% debt remaining before applying for a mortgage. Sustain the low debt percentage by paying more than the minimum balance every month during the application process. Additionally, remember to pay bills in a timely manner as not doing so will affect credit score and interest rate, lowering your chances of earning a desirable mortgage. Furthermore, don’t invite new debt into the mix, which can tamper with credit history and score.

4. Pay a down payment

The typical down payment rate is 20% of the mortgage costs. Increase the down payment to entice lenders who may not favor your application due to imperfections in debt, finances, or credit. It is wise to increase it if you want to have lower debt or improve interest rate terms. Decrease the payment if money is tight or if lenders like your finances on the application. It’s rare to obtain a mortgage without a 5% minimum down payment.

5. Aim for pre-approval

While success isn’t a done deal, a mortgage pre-approval puts you ahead of the real estate competition. It’s a realistic view of affordability buyers can use to hone in on homes of interest that meet lender qualifications. Agents are aware of the pre-approved letter and sellers can take buyers with pre-approval letters seriously because there’s reassurance of payment. Meanwhile, the lender views pre-approval as a written estimate of the loan and terms for the buyer based on finances.

6. Don’t add new debt

Once you decide to commit to obtaining a mortgage, don’t charge a large expense to any credit card. Wait until the home sale is final before charging the card. However, buyers may delay large expenses or find another method of payment once the mortgage arrives.