A lot of new home buyers do not have the first clue about getting a mortgage loan. Most of them hear about lower interest rates or home prices dropping and rush into buying a place of their own. But getting a mortgage loan is different from a car loan or an education loan for that matter, which is why a lot of people get disappointed when their loan applications get denied by lenders.
Therefore, here are a few tips that you can check out in case you are looking to buy a new place for yourself.
Knowing your credit score
Having a good credit score is imperative for getting your loan application approved. Most people submit their applications without checking their credit score; they think that they have enough credit points to get their applications approved. Checking and cleaning up your credit history, along with fixing credit report errors before applying for a loan is the best way to go about it.
The biggest mistake you can make regarding your home loan application is to walk in without cash. Down payments, home inspections, closing costs, home appraisals, credit report fees, application fees, etc. are various areas where you would have to cough up cash. Therefore, saving up some cash beforehand is the wisest thing to do to get your loan application approved.
Don’t quit that job
Any discrepancies in your employment status can prove harsh for your loan application. Lenders generally screen your loan applications based on the information you provide them with. In case you quit your job for a low-paying one or decide to become self-employed, it gets imperative for them to re-evaluate your application, causing delays or absolute termination of the application altogether.
Pay old debts and avoid new ones
It is not necessary to have a zero balance on your credit card(s) in order to get your home loan approved; however, the lesser your debts, the more your chances of getting the loan approved. Lenders generally look at your debt-to-income ratio before deciding to approve your application. In case they approve your loan with a consumer debt on the cards, avoid getting into any new debts. Lenders usually re-check your application before closing, and appearance of new debts on top of your consumer debt may ruin your chances of getting the loan.
Pre-approve your mortgage
Getting your mortgage loan pre-approved before buying the house is a financially and emotionally sound decision. This way, you can easily find out how much you can spend to buy your future home, eventually preventing yourself from falling in love with a property that you cannot possibly afford.
Buying a new home is a huge thing, and should be done responsibly. If you really want to get your mortgage loan approved in as little time as possible, follow the above mentioned steps, and you’re good to go!