How to get approved for a home mortgage loan
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 to be maintained in order for your conventional mortgage loan application not to be denied.
Also, having derogatory credit information could make it difficult to get approved for a mortgage. To avoid unwanted denial of your requested loan, 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 reduce your balance and relieve your private mortgage insurance.
The down payment isn’t the only fee you should be concerned about. Purchasing a mortgage also involves home inspections, title searches, closing costs, application fees, credit reporting fees, and other fees. Save cash for these payable fees.
stay at your job
Changes in your employment and/or income status will have a significant 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 get a job with lower wages will affect plans, leading to a reassessment of your finances to check if you still qualify for the loan.
Pay debts and avoid new debts
Qualifying for a loan does not require that your credit card have a zero balance. But, it is better if you owe your creditors less. Your debts determine whether or not you will get a mortgage. Also, you 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 reject 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 the credit and when they discover that there is 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 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 preapproved applicants for more than they can afford, be smart, live within your means, and buy a home you can afford.