When you are dreaming about buying a house, there are few things like applying for a mortgage that would scare you. It is especially true for those people whose mortgage application have been rejected few times before thus, putting their application under the scanner. Here are few strategies to make your profile look stronger and help you get qualified for a mortgage.
1. Credit Report
Always make sure to get a copy of the credit report of yours. By looking into the credit rating, you will know how the lenders will view your application. A credit report can be ordered for free or for a small amount via email or online. If the credit rating is poor, then the chances of getting the mortgage are low and hence, you need to work out on increasing your credit score.
Credit rating can be boosted in a number of ways if you develop a good credit habit. Small things like paying the bills on time will help increase the score. Keep a watch on the habits and then you will realize how the score goes high! To get a mortgage at the best interest rate, here are some do’s and don’ts you need to follow for increasing your credit score. Shop around only when you are ready to buy a home. Do not put several applications unnecessarily before taking a decision. The number of the application you put will only act as a red flag and it will become difficult to get loans from lenders. For each application that you apply, the credit score decreases.
Requesting for consumer credit so many numbers of times is another no-no. It is true that people are tempted to apply for new credit cards in the stores and this is a common thing during holidays as there would be many special offers but it would eventually reduce the credit score. Think twice and give preference to the right one – a special offer or a good credit score? Due to some tough situation, if you are not able to pay a loan, it is always better to call the concerned person/lender and explain your situation.
Do not default on any loan and always try to pay the loans on the right time. If there is any default from your side, try to pay back the old debts. Start to build some history of credit. This holds especially true for young people who have just started. It is better to have a credit card with a low limit and pay the balance promptly every month. This will help in improving the credit rating.
2. Cash Rules
If you have more cash in hand, then it is better to plan for a maximum down payment. This is particularly important if you are in a stage where you are investing. There are so many down payment strategies that you can follow. Ask a good financial advisor about the various options available.
3. Seek your Family’s Help
Our parents and grandparents have gone through all these hardships when trying to buy a house while they were young. But in today’s world, it is even tougher to go through the procedures in the market. Ask for a helping hand from them and they might as well help you by providing some amount for your down payment or for closing your bad debts.
4. Stay Employed
To get approved for a mortgage, a job is very critical. You might not be interested in your current job but staying in the right job is important at least till the loan is sanctioned. When the mortgage application is being processed, the job information of the applicant is checked again and again. If the applicant leaves the job before the loan is sanctioned or takes a much less paid job, then the mortgage application might be rejected without further processing.
5. Plan and Discuss Early
If you have the idea of purchasing a property, then make sure to get in touch with the right person who will guide you and make you prepared for executing your plans.
When you look for a property, select the ones that are affordable. It not only makes your life easy but it is also an important factor the lenders see while processing the mortgage application of yours. If you are not sure, sit with a loan officer and discuss it to get pre-approval. Pre-approval gives an idea about the price range where the buyer should stop.
The number of the application you put will only act as a red flag and it will become difficult to get loans from lenders. For each application that you apply, the credit score decreases.
It is better to have a credit card with a low limit and pay the balance promptly every month. This will help in improving the credit rating.
If the applicant leaves the job before the loan is sanctioned or takes a much less paid job, then the mortgage application might be rejected without further processing.
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