If you are planning to apply for a home loan, check out the following helpful tips to get your application approved.
Know Your Credit Score
Credit activity and credit scores will greatly affect your mortgage approval. Lenders usually require minimum amount of credit score that should be maintained so that your temporary mortgage loan request will not be denied.
Also, having derogatory credit information may hinder mortgage approval. To avoid unwanted denial of your requested loan, you should lower your debts, pay bills on time, and fix errors on credit reports.
Save Your Cash
Mortgage lenders require down payments which depend on the kind of loan. If you have the means, pay a higher down payment. This will lower your balance and alleviates your private mortgage insurance.
Down payment is not the only fee you should be worried about. Acquiring a mortgage also involves home inspections, title searches, closing costs, application fees, credit report fees and other fees. Save up cash for these payable fees.
Stay at Your Job
Changes on your employment and / or income status will have a major effect on the mortgage process. The information you provided in your application will be the basis of your home loan approval. Giving up a job to be self-employed or getting a lower paying job will make a wrench in the plans, leading to a reevaluation of your finances to check if you're still qualified for the loan.
Pay Debt & Avoid New Debt
Qualifying for a loan does not require that your credit card be zero balance. But, it's better that you owe less to your creditors. Your debts determine whether you will get a mortgage or not. Also, it will determine how much you will acquire from the lender. When you have many credit card debts which makes your debt ratio high, the lender may refuse your loan request or provide a lower mortgage.
However, even though you obtain approval for a mortgage with debt, it is advised that new debt should be avoided while under the mortgage process. Before the mortgage closing, lenders recheck credit and when they found out that there are new debts they can stop the closing.
Have Pre-Approval for a Mortgage
Having your home loan pre-approved will help you determine what you can afford before bidding on properties and what interest rate should you be paying on the loan.
Determine What You Can Afford
Choose a home that will fit your budget. Although some lenders pre-approved applicants for more than what they can afford, be smart, live within your means and purchase a home that you can afford.