4 Simple tips to increase your chances of qualifying for a mortgage
Are you planning to gift a new house to your wife this spring? If yes, then you should start spending time in understanding the mortgage process and the criteria for qualifying for a home loan now. The reason is, around 70% of the homebuyers have not been able to meet the lenders’ strict standards to secure a home loan in 2010.
Several loan applications are simply rejected due to the low credit scores of the potential homebuyers. Lenders are not ready to take any chances when lending money to the homebuyers. So, you should try to avoid making any mistakes when applying for home loan. Rather you should work on the factors that may help you secure a mortgage quickly, Read along to get acquainted with few tips that may help you grab the best mortgage deal successfully.
Mortgage – Tips to increase your chances of obtaining it
Here the 4 tips that can help to increase your chances of qualifying for a mortgage:
1. Reduce your debt level: Before applying for a home loan, make sure your debt-to-income ratio is below 28%. You can keep the ratio below 28% by making time payments on your debts. Try to keep the ratio as low as possible. Lenders will definitely look at this ratio before granting your loan application. This ratio will also help you have an idea about “how much house can I afford” with your salary.
2. Produce a clean credit report: Lenders love to see a clean credit report. A clean report implies that the potential homebuyer is a responsible person. He/she knows how to handle credit/loan efficiently. So, go through your credit reports secured from the 3 credit bureaus and start working on removing all the negative items from them. The lesser the negative items, the better your chances of securing a mortgage. A healthy credit score will let you obtain a low interest home loan.
3. Restrict your spending impulses: If you are really deadly serious about gifting the perfect house to your wife, then you should curb your impulses to make big purchases prior to applying for mortgage. Lenders will check your credit report at various stages of loan process. If lenders see that you have opened multiple credit accounts recently, then they may disapprove your loan application.
4. Gather all the documents: Gather and keep the copies of your pay stubs, account statements, income tax returns, and other financial documents in a file as the lenders will want to see these papers before giving you a loan. Make sure you have 3-4 copies of these documents as you never know how many times you will be required to produce them to the lenders.
Finally, the last tip will be to increase your down payment amount. A higher down payment amount will help you lower the loan-to-value ratio, which in turn can raise the chance of your loan application being accepted by the lenders.
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