Most people know nothing about the mortgage loan process until they start themselves. Obtaining a mortgage should not be something done without educating yourself first. The process of getting a home loan differs vastly from renting apartments or getting a car loan.
Making this mistake can leave many applicants getting their mortgage loan denied by the bank. Buying a home can be a stressful process, and it can be worse when you are ill-prepared. Below are some top pieces of advice to help you get your mortgage loan approved.
1. Get Help
If you have been renting while trying to save money for a deposit on a home mortgage, you know how difficult it can be to save up enough money. If you have already been turned down by your bank or are afraid you’ll be denied, consider getting help from a reputable company such as No1 Property Guide Victoria. They offer their clients home and land packages that could be moved into within 30 days.
It doesn’t matter if you are a first-time homebuyer or have bought multiple homes before, they will educate you on how their system works with the no or low deposit program and how much you may be able to borrow. If you are tired of being stuck in the rental cycle, they can help you get the home of your dreams.
2. Know Your Credit Score
Before you take out any type of loan, especially a mortgage, is important to check your credit report. Future homeowners who don’t review their credit history and scores before they submit loan applications can run the risk of getting their applications denied based on the information a lender sees.
As far in advance as possible, check your credit to see if there are any discrepancies or ways you can improve your score to get a better loan rate. Knowing what your credit looks like will ensure there are no surprises when you go to apply for your mortgage.
3. Save Your Money
The requirements for obtaining mortgages vary between lenders, loan types and the economy. When it is time for you to apply for a mortgage, you need to have an ample amount of cash ready to be used as a down payment. If you head to the lender without any money, you may find your application be rejected right away.
The amount of money you will need to save and put down on a mortgage will vary based on different factors such as the lender, length of the loan, credit history, income history and the type of loan you’re applying for. You will also need to save money for things beyond the down payment such as home appraisals, home inspections, title searches, application fees, credit report fees, and closing costs.
4. Stay Employed
It is important to stick with your job throughout the home buying process. If there are any changes to your income status or employment before you have closed on your home, you may end up having your mortgage process delayed or canceled.
5. Pay Debts Down
You do not have to be debt-free to qualify for a mortgage loan. However, owing less to creditors will make you look better to the lender. Before approving a mortgage, lenders will evaluate an applicant’s debt-to-income ratio. Even if you get approved for a mortgage, it is important not to incur any more debt before closing. Lenders often re-check an applicant’s credit before they finish the closing process. If they notice any new debt that significantly changed the debt-to-income ratio, they may stop the closing.
6. Get A Pre-Approval
Before you begin the home searching process, get a pre-approved loan to know what you can afford and which houses you should be looking at. The process is as simple as giving your personal and financial information and then waiting for them to respond. Getting a pre-approved loan will allow you to look at houses in a more financially responsible way.
7. Be Sure About What You Can Afford
It is not unusual for many lenders to approve applicants for more than they can comfortably afford. Once you have received your pre-approval letter from the lender, be sure the amount you would pay each month can fit into your budget without overstretching your limit.