Taking out a mortgage is very serious because it is a huge financial commitment. However, getting a mortgage is sometimes not the easiest thing in the world to do, but there are a few things you can do to increase your chances of getting your first mortgage approved. Below are five tips that can help you get a mortgage.
1. Check And Improve Credit Score
One of the main factors financial institutions and mortgage providers will take into consideration is your credit score. If your credit score is bad, then you may still get approved for a mortgage, but the interest rate on it will probably be very high. There’s also a good chance you won’t be approved if you have bad credit. If you want to improve your chances of getting approved for a mortgage, then check your credit score and try to improve it, if need be, and then reapply for a mortgage when your score has improved.
Improving your credit score may seem impossible, but it’s not. There are many things you can do to improve your credit, even just by a little bit. You can request a credit report for free, as well as your credit score. If you believe your credit will stop you from getting approved for a mortgage, then start doing things to improve your score.
2. Have A Large Down Payment
If you have a large down payment for a mortgage, then your chances of getting approved goes up greatly. Generally speaking, the more money you have to put down, the better off you’ll be. Ideally, you should have 25% to 35% of the asking price for the home you are interested in buying. This may seem like a lot of money, but mortgage lenders will be more inclined to approve you for a mortgage, especially if you have bee with the same employer for quite sometime, as many lenders prefer applicants who have been steadily employed.
If you don’t have any money saved up, then don’t expect to get approved for a mortgage. The only way you will probably get approved without having much money saved is if you have a real high paying job and you can prove you make good money and have been with your employer for awhile. If you’re self-employed, then you may be asked by a lender to show a few years worth of accounts. However, the best option is to save cash and have something to show lenders when the time comes to apply for a mortgage.
3. Apply With Various Lenders
One lender may not approve your mortgage application, while another lender may approve it. Also, two lenders may approve you for a mortgage, but one may have a really high interest rate, while the other has a very low interest rate. This is why it’s important to apply for a mortgage with various lenders. The more lenders you apply for, the better your chances are you will be approved for a mortgage, but remember to not accept the first mortgage you are approved for because you may be approved by another lender and you may get a better deal.
Also, while you’re at it, try to get pre-approved for a mortgage. You can see if you qualify by going online and applying for a mortgage, but some lenders may not offer online applications. Nonetheless, applying for mortgages online can save you time and energy. If you are pre-approved for a mortgage, then it should make things a lot easier for you.
4. Don’t Apply For New Credit Before Applying For A Mortgage
Try not to apply for new credit before you apply for a mortgage. Some lenders may not look favourable upon this, so your best bet is to not apply for new credit/loans until after you are approved for a mortgage. If you apply for a bunch of loans and credit cards, then good luck getting approved for a mortgage.
5. Pay Debt Down
If you have debt, then do your best to pay it down. Doing this will improve your credit score over time and it will increase your odds of getting approved for a mortgage. The best thing to do is to pay your biggest debt off first, even if it takes awhile to do, and then pay the smaller debt off, and if you’re having trouble doing this, then consider working with a debt consolidation company. They may be able to help you pay your debt off faster and you might not have to pay the full amount you owe.
Getting a mortgage doesn’t have to be difficult. At least it doesn’t have to be when you keep the above tips in mind. Whehter you choose to buy new or go with a fixer upper you should keep the above info in mind and you could be one step closer to getting a mortgage.