In order to purchase a home, most people need to get approved for a home loan first. When it comes to getting approved for a mortgage, there are steps you can take that will increase your chances of not just getting approved, but getting approved for favorable terms.
Step #1: Save, Save, Save!
When you apply for a home loan, the lender is going to look at how much money you have saved up. The money you have saved up matters, as you are going to need to have money to make a down payment on the loan. If you don't have any money saved up, and you can't make the down payment, you are not going to get very far in the application process.
The more money you have saved up, the better. If you can show that not only can you afford the down payment and closing costs, but you have enough saved up to cover three to six months' worth of mortgage payments after covering those expenses, you will really show how financially responsible you are. Having a healthy savings account can really help you with securing a home loan.
Step #2: Avoid New Debt
When you are looking to purchase a home, don't add new debt to your portfolio. You want to reduce the amount of money that you owe to creditors and collectors. You don't want to increase the amount of debt that you owe. Having a lower credit to debt and income to debt ratio will help you get more favorable terms.
If you need a new vehicle, or you are thinking about opening a credit card at a home improvement store, wait until the purchase of your home is complete. Adding new debt when you are trying to get a home loan can derail the process.
Step #3: Reduce Your Debt
In addition to not adding new debt, it is smart to pay down your debt. If you have any small loans or credit card balances that you can pay off, do so. If you can reduce your credit card balances so that you are only carrying very low balances, do so. Reducing the debt that you have will make you a more attractive candidate.
Step #4: Stick with Your Job
Even if you really dislike your job, don't quit before you close on your mortgage. One of the factors that lenders consider when deciding if they want to provide you with a home loan is your income and work history.
If you quit your job, even if you have a new one lined up, that could harm your chances of getting a loan. Lenders like to lend to people who have a job and have been with that job for a while. If you want to start a new job, wait until you have closed on your mortgage, then start the process of finding a new job.
If you want to secure a favorable mortgage and be able to purchase the home you want, you need to save up your money, avoid new debts, pay off old debts, and stick with your job during the mortgage process. Taking these steps will greatly increase your chance of getting favorable terms and approval so you can purchase a home. Want to know? Have other questions? Try visiting websites like Lund Mortgage Team to ask them and see what more you can learn.Share