How to get approved for a home mortgage loan

If you are planning to apply for a home loan, check out the following helpful tips to get your application approved.

Know your credit score

Credit activity and credit scores will greatly affect your mortgage approval. Lenders generally require a minimum amount of credit score that must be maintained so that your conventional home loan application is not rejected.

Also, having derogatory credit information could make mortgage approval difficult. To avoid unwanted denial of your requested loan, you must reduce your debts, pay bills on time, and correct errors on credit reports.

Save your money

Mortgage lenders require down payments that depend on the type of loan. If you have the means, pay a higher down payment. This will lower your balance and ease your private mortgage insurance.

The down payment isn’t the only fee you need to worry about. Buying a mortgage also involves home inspections, title searches, closing costs, application fees, credit reporting fees, and other fees. Save cash for these payable fees.

Stay at your job

Changes in your employment and / or income situation will have a major effect on the mortgage process. The information you provide on your application will be the basis for your home loan approval. Giving up a job to become self-employed or getting a lower paying job will affect your plans, leading to a reassessment of your finances to see if you still qualify for the loan.

Pay off your debts and avoid new debts

Qualifying for a loan does not require your credit card to have a zero balance. But it is better if you owe less to your creditors. Your debts determine whether or not you will get a mortgage. Also, it will determine how much you will purchase from the lender. When you have a lot of credit card debt that makes your debt ratio high, the lender may reject your loan application or provide a lower mortgage.

However, even if you get approved for a mortgage with debt, it is recommended that you avoid new debt while you are in the mortgage process. Before mortgage closing, lenders recheck credit and when they discover new debt, they can stop closing.

Get pre-approved for a mortgage

Having your home loan pre-approved will help you determine how much you can afford before bidding on the properties and what interest rate you should pay on the loan.

Determine what you can afford

Choose a home that fits your budget. Although some lenders pre-approved applicants for more than they can afford, be smart, live within your means, and buy a home that you can afford.