The process of getting a mortgage home loan is different from getting a car loan or renting an apartment. Applicants must recognize this so they don’t get disappointed when a lender denies their mortgage loan application.
It is stressful to Buy a house, and being ill-prepared heightens the anxiety. In other for you to avoid this anxiety, there is a need for you to Learn how to think like a lender and educate yourself on the best ways to get your mortgage loan approved:
Steps To Get Your Mortgage Home Loan Approved
1. Credit Score: as a home buyer, it is very important for you to know your credit score. If possible, review the scores and credit history before you submit a mortgage home loan application.
According to the Home Loan Learning Center, a large percentage of lenders require a minimum credit score of 680 (620 for FHA mortgage loans) – and if your score falls below 680, lenders can deny your request for a conventional mortgage loan.
2. Get Pre-Approved for a Mortgage: the pre-approval process is fairly simple: Contact a mortgage lender, submit your financial and personal information, and wait for a response. Pre-approvals include everything from how much you can afford, to the interest rate you’ll pay on the loan. The lender prints a pre-approval letter for your records, and funds are available as soon as a seller accepts your bid. Though it’s not always that simple, it can be.
3. What Can You Afford? Is good you know what you can afford. You shouldn’t let your lenders dictate how much you should spend on a mortgage loan. Lenders determine pre-approval amounts based on your income and credit report, and they don’t factor in how much you spend on daycare, insurance, groceries, or fuel. Rather than purchase a more expensive house because the lender says you can, be smart and keep your housing expense within your means.
4. Clear Your Debt: to get your home loan application approved, pay down debt and avoid new debt. It’s true that don’t need a zero balance on your credit cards to qualify for a mortgage loan. However, the less you owe your creditors, the better.
Lenders evaluate your debt-to-income ratio before approving the mortgage. If you have a high debt ratio because you’re carrying a lot of credit card debt , the lender can turn down your request or offer a lower mortgage.
The reason is because, your entire monthly debt payments — including the mortgage – shouldn’t exceed 36% of your gross monthly income. So it will be better if you avoid any major purchases until after you’ve closed on the mortgage loan.
However, should you be discouraged if your application is not approved? No, instead let it be motivation to improve your credit and finances.