| December 14, 2011
“More than 2.5 million people were turned down for mortgages in 2010, according to the Federal Financial Institutions Examination Council. That’s about 23% of all those who are seeking a loan to buy a house,”-Daily Finance. It’s no secret that borrowing standards have become tighter in recent years. Lenders are taking a more detailed look at everything about a prospective borrower to decide if they should be approved for a home loan. As a potential homebuyer you should be prepared for this. In this blog we will discuss some ways in which you can increase your chance of approval for a mortgage.
Do your research.
Before you start the process of applying for mortgages, make sure to do your homework on the different loans out there. Read up on the loans that you think may work for you. Let the agent know what you’re interested in and why-it will help the agent help you by knowing what you really want and are looking to do. Doing this will help make the process smoother for everyone and the lender will appreciate working with you.
Find out where your credit score stands.
One of the first things you should focus your attention on is improving your credit score. Get a copy of your credit score and check it thoroughly for any mistakes. If you happen to find any discrepancies report those immediately. If you have a low credit score, you are less likely to receive approval for a mortgage. The higher your credit score, the better interest rate you will be able to receive. For more information check out our previous post to find out what else you can to do increase this pivotal number!
Save! Save! Save!
The more that you save for your first house the better off you will be. If you can make a bigger down payment, you are more likely to get approved for a mortgage. In addition, putting down a bigger percentage can help you get a better interest rate.
Pay off any debt.
When you apply for a mortgage, lenders take a look at your debt to income ratio. The more monthly financial commitments you have the less the lenders are willing to let you borrow. It is best to pay off any outstanding debt you may have before trying to apply for a mortgage. Again this will prove to the lenders that you are financially responsible.
Present yourself in the best light.
When you’re communicating with a loan officer, try to demonstrate that you are a competent, cooperative, polite and trustworthy person. One way to do this is to share your online profile with them (whether it be Facebook, LinkedIn, etc). This will help them put a name to a face and a loan to a home and family. For more information on working with your loan officer, please see our previous post, Your Loan Officer is Interviewing You: Tips to Impress!