The path to homeownership is not always straightforward, and instead, is often filled with numerous twists and turns, some foreseen, others wholly unexpected. With this in mind, it pays to try and be as prepared as possible, not only for every eventuality, but for every step in the process.
One significant step in the path towards homeownership is mortgage approval, but with the following tips, you could get your mortgage application approved with few hitches:
1. Check your credit score
Giving you an overall picture of the general health of your finances, a credit score can be checked each quarter, and you should do everything you can to try and increase it.
2. Try to save for a bigger down payment
The bigger your down payment is, the better, not only because it decreases the amount you’ll need to borrow and reduces the interest you’ll have to pay, but it improves your chances of even getting approved for a mortgage.
3. Do your best to keep your income constant
If you don’t provide your chosen mortgage lender with the evidence that you can make the payments, they’re not likely to approve it. Being engaged in full-time employment is the single most effective way of proving to your lender that you have (and will continue to have) the funds to pay for your mortgage.
If you’re self-employed, it would make sense to reach out to a professional, licensed mortgage broker who can give you the best advice.
4. Minimize your existing debt
Paying your mortgage will be much easier if you don’t have any other large debts to pay off, and having debt will also make it harder for you to get approval for a mortgage.
5. Get mortgage pre-approval
When a lender assesses your current financial situation and gives you pre-approval for a set mortgage amount, interest rate and term, this is known as mortgage pre-approval. Valid for 90 to 120 days, they give you time to search for a new home while locking in a great deal for your mortgage.
6. Shop around for a great rate
Working with a mortgage agent is the best way to do this, and by shopping around and finding lenders with lower rates, you’ll not only have lower monthly mortgage payments, but you’ll be more likely to gain mortgage approval and be able to borrow more.
7. Be honest about your financial situation
It’s important to take all factors into account when applying for a mortgage with a lender, such as your living costs, debt payments, living costs and many others, and remember that your lender will consider them all. Try to be realistic about what you can and can’t afford, and keep that in mind throughout the entire mortgage application process.
Simply put, get your finances in order, and the rest will follow. For more detailed advice and guidance about mortgage pre-approval and homeownership in general, reach out to a trusted, reputable mortgage broker now.