Worried About Mortgage Approval? Two Tips To Help
Are you planning to buy a home and are looking for a better interest mortgage?
Comparing interest rates is a crucial step, but what’s more important is that your mortgage gets approval. That might seem to be difficult, but we assure you that with the right practice you can do it very easily.
There are various factors that determine whether or not you’ll get approval for your mortgage. Moreover, even if you get approval, these factors determine the final amount lenders will willing to borrow.
There’s certainly no unfailing shortcut to get mortgage approval. However, to make the process relatively smoother for you, we’ve compiled certain tips that can increase the chances of your mortgage getting sanctioned.
Cut down your existing debts
How do lenders decide whether to lend money to you or not? They do it by looking at your debt to income ratio.
Before lending money to you, a lender would most likely want to know whether or not you’ll be able to make your payments. Now you probably would want to have a stable and high income to manage your mortgage payments in addition to your other debts, and for that, a full-time stable is a good option. But making payments can often eat up all your salary in one go, with little left to make every day ends meet, let alone save.
Thus, it’s always advised to pay as much of your debt as early as possible. This includes your car loan, student loan, and credit cards. It will improve your debt to income ratio, thereby significantly boosting your chances of getting the mortgage approved.
Opt for a significant down payment
Try to pay a large chunk of the total amount as the down payment. This will not just lower down your mortgage amount, but it will also mean that you won’t have to pay much interest on the whole sum. Moreover, your monthly payment amount will also become very manageable. Plus, it will increase your trustworthiness since the lender will have limited risk.
Improve your credit score
A credit score indicates how trustworthy you are when it comes to borrowing funds. One look at your credit score can easily tell a lender whether or not you’ll be able to repay your loan on time.
If your credit score is less than 600, most banks won’t approve your mortgage. They’ll presume that you’re less likely to make payments on time and they’ll have to lend you money on their own risk. As a result, you may have to use a private lender which will charge you a higher mortgage rate to compromise for the extra risk.
The only solution to this issue is that you should try to improve your credit score before applying for a mortgage.
A higher range of stable income, a lower number of existing debts, and a good credit score are some tactics that can improve your chances of getting your mortgage approved quickly. For more personalized advice on the mortgage process, you may consult professionals like mortgage brokers.
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