Lenders take into account a variety of factors before approving your mortgage. Their criteria will establish whether you qualify for a loan and the maximum amount they can lend you. Obtaining a loan can be easy if you follow the right steps. You may use all your energy and resources and your application may still be declined. This unfortunate outcome may be as a valuable learning experience. A rejection allows you to recognise your mistakes and work on improvements
Check your credit score
Mortgage lenders look at your credit score to determine whether you qualify for a loan and how much you qualify for. If you have a poor credit score, chances are you will fail your mortgage application. People with a bad credit score are likely to lose a mortgage request of get a mortgage loan with a high interest rate. Your credit history tells a lot about your financial stability. A bad credit history and score means you do not pay your loan on time, or you have impending loans and credits. Ensure you clear all the negative results before you apply for a mortgage if you want a positive outcome.
Save extra on your down payment
Sometimes, lenders reject mortgage applications if they feel the down payment is inadequate. Your down payment should be at least 5% of the total cost of your new home, but you should save much more. The down payment shows how committed you are to buy the house and complete the loan payments. Making extra on the down payment will also lessen the burden of the mortgage repayment; you will take less in mortgage which means you won’t have to pay a lot of money in interest and you will clear the repayments in a short time
Create a plan
Buying a house is not easy. You have to make sure you buy the right home which you can afford. Before you apply for a mortgage loan, you have to figure out what you want first. In your plan, write down which kind of house you want, how much you are willing to spare and the area you would like your home to be. It is never a good idea to get the loan first and buy the house later. There are many things that could go wrong, you could get
Get a pre-qualification letter
A pre-qualification letter basically gives you an estimate of how much mortgage you can afford. A lender uses you credit and income to calculate this estimate. You should go to a couple of lenders to get a rough estimate of the amount. You can compare this with your plan and to know the exact amount you need.
When you get a pre-qualification letter, do not forget to do the math on your income to see if you will afford the repayments. Sometimes, the lenders estimate may be wrong. If you take a mortgage that requires too much commitment on your income, you will end up facing some financial consequences in the future.
Follow these tips if you want your mortgage application to be approved. Carefully go through all your documents to ensure there are no tiny mistakes that will cost you your application