Improving Your Chances of Getting a Mortgage
When you purchase a property, you make one of the biggest financial investments. Most people carry out their home purchase transaction by taking a mortgage loan. However, not all of them recognize the changes in the current lending market.
If you still think that spring is the best season for home buying then don’t count on that. Now there are many new lending hoops that you must jump through to get your mortgage loan approved.
Even if you understand the complexity involved in a mortgage process, there is no guarantee that your mortgage will be approved. To make that happen, you must take a few factors into account. These considerations will help you become more attractive in your lender’s eyes.
Here is what you must consider!
Reduce the total debt
Before you give an application for a mortgage, pay off your other debts. This may include monthly car installment, credit cards or student loan. The objective is to reduce the debt-to-income ratio that is the foremost thing considered by lenders. This will also help in improving your credit score and hence your odds of getting your mortgage loan approved.
Increase the down payment for the mortgage loan
You might not know this but you can increase the chances of your loan approval by increasing the amount of down payment. When you increase the down payment amount, it cuts down the loan-to-value ratio. This means more chances of loan approval. To arrange money for a big down payment, you may save up a bit, get financial help from your relatives or friends or consult community programs that help first time home buyers.
Keep your paperwork ready
When you opt for a mortgage loan, you will have to provide some documentation. Your lender may ask you to provide pay stubs, assets information, bank statements, income tax returns, credit documents and several other financial statements. This means that you just cannot jump into a mortgage application right away or make your lender wait for relevant documentation.
In fact, you must keep your paperwork complete and together. You may need to provide this paperwork more than once, so you must make copies of every document; in case required.
Delay large purchases
Until you get your loan approved, avoid applying for any large purchases. Lenders not only evaluate your credit report when you apply for the loan but also right before approving the request. This means that last minute shopping spree can be flagged. So avoid shopping for your new house’s decoration and wait until you get through the mortgage loan approval.
Keep your credit record clean
You can start it by first figuring out your reported scores. Get your free credit report from all the credit bureaus. Review them thoroughly and note down the negative items. Correct all the outdated and inaccurate items. The minimum credit score requirement is 580 or 720 or higher in order to qualify for a lower interest rate on the mortgage.
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