If you plan 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 generally require a minimum amount of credit score that must be maintained in order for your conventional home loan application to not be denied.
Also, having derogatory credit information could make it more difficult to get a mortgage approved. To avoid unwanted denials of your loan application, you must reduce your debts, pay your bills on time, and correct errors on your credit reports.
save your cash
Mortgage lenders require down payments that depend on the type of loan. If you have the means, pay a higher down payment. This will lower your balance and ease your private mortgage insurance.
The down payment isn’t the only fee you should worry about. Purchasing a mortgage also involves home inspections, title searches, closing costs, application fees, credit reporting fees, and other fees. Save cash for these fees due.
stay at your job
Changes in your employment and/or income status will have a major effect on the mortgage process. The information you provided on your application will be the basis for your mortgage loan approval. Quitting a job to become self-employed or getting a job with lower wages will affect plans, leading to a reassessment of your finances to see if you still qualify for the loan.
Pay off debts and avoid new debts
Qualifying for a loan does not require that your credit card have a zero balance. But, it is better that you owe less to your creditors. Your debts determine whether or not you will get a mortgage. Also, it will determine how much you will acquire from the lender. When you have a lot of credit card debt that makes your debt ratio high, the lender may deny your loan application or provide a lower mortgage.
However, even if you are approved for a mortgage with debt, it is recommended that you avoid new debt during the mortgage process. Before the mortgage closes, lenders recheck your credit and when they discover new debt, they can stop the closing.
Get pre-approved for a mortgage
Having your home loan pre-approved will help you determine how much you can afford before you bid on the properties and what interest rate you should pay on the loan.
Determine what you can afford
Choose a house that fits your budget. Although some lenders pre-approve applicants for more than they can afford, be smart, live within your means, and buy a home you can afford.