Buying a new house or property can be very challenging and stressful. Not knowing whether you’ll be approved for a home loan or not increases your anxiety. Here are some helpful tips to increase your chances of getting approved:
7 Tips on How to Get Your Mortgage Loan Approved
Clear Your Credit
Some borrowers take their credit history for granted. They assume that previous non-payments, whether from the same lender or a different bank, are forgotten. Most banks share non-paying borrower’s history to warn other banks of the existing balance. Clear up your credit history by paying your bills on time and paying off existing loans.
Evaluate Your Financial Capacity and Stability
Most lenders will ask about your assets and cash flow. Make sure that you have an allocated budget for the house loan from your income in the following years. Only consider borrowing if you have a steady and stable cash flow to avoid extra charges and interests. Be sure to maintain a good performance at work if it is your main source of income. Avoid over-spending, going on an expensive vacation, financing a new car and co-signing another loan until you’ve secured the loan.
Use a Mortgage Calculator
A mortgage calculator is a great tool to assess if you can actually afford the loan. They can show you different monthly mortgage payments according to the house price, time period of the loan, interest rates, loan tenure, and annual income scenarios. You can find many of these tools online.
Check What You Can Spend
Stay realistic. Don’t go for a “dream house” if your income cannot sustain it. Again, it is important to budget your finances properly to see how much you can realistically spend on a house. This will save you from a lot of headaches and heartaches in the future.
Getting a loan without initial savings is the quickest way to get rejected. Even as you borrow, there are a variety of expenses that you need to pay in cash, such as the down payments, appraisals, title recoveries and more. On average, you’ll need to pay 20% of the home price for the down payment.
Gather all the Documents
Most lenders will give you a list of requirements for the loan. Having them ahead of time will save you time and will increase your chances of getting the approval. Make sure to have updated identification with the correct address. Also, prepare your proof of income and necessary collateral papers. If you are self-employed, you might need more evidence of your source of income.
Be Quick to Respond
Always be alert after submitting an application. The lender might need more information, documents or payments so it is important to keep your lines open so you can respond as soon as possible.
Waiting to respond might cause delays and complications, and it could also blow up your entire application. After all the effort you’ve done at this point, it is important to stay on the good side of the lender. This might cost you your dream home and any initial deposits you’ve made as well.
By following these steps the journey to obtaining a mortgage will be an easier one.