Buying a home can be a stressful process, especially if you are counting on your mortgage application to be approved. To increase the chances of getting approved for a home loan, it’s important to be prepared for the process. Here’s what you can do to ensure your mortgage application gets approved:
Maintain a good credit score: Before you even start looking at houses, make sure to check your credit score. If your credit score is not great, it’s best to use the time until your application to try and improve it.
Work out the numbers: Next, you should work out your numbers. Take your current income into account and understand how much you are willing to spend on the house. Ensure that you account for the down payment, maintenance costs, property taxes, utilities, monthly payment towards the loan, and the moving costs. Based on the figure you come up with, you can decide which type of loan to opt for.
Research various loan options: It’s a good idea to take some time to research various mortgage options. Different mortgage options usually have different terms and may be ideal for particular types of home buyers.
Start saving for the down payment: If you are planning to apply for a mortgage in the near future, make sure to start saving up money. The biggest out-of-pocket expense most home buyers have is the down payment. If you opt for a conventional mortgage, you’ll need to make a 20% down payment. However, certain mortgage options allow home buyers to pay as little as 3.5% for the down payment. In addition to the down payment, you’ll also need to be prepared for the closing costs. It’s always good to have some surplus money in your account as well.
Gather your documents: Right before applying for a mortgage, check the documentation requirements of different lenders and gather your documents accordingly. It’s likely that you’ll need copies of your W-2s, paystubs, proof of employment, etc.
Avoid any big purchases or change in employment: Once you start the loan application process, avoid charging any big expenses to your credit card. Also, ensure that you don’t change your job until the loan comes through.
Once you get approved for the loan, make sure to set up automatic payments to your lender to avoid missing the repayment dates.
