Buying your first home is a landmark event that screams financial success; a milestone is reached so learn these Tips to Get Your Mortgage Loan Approved.
However, even if you meet all the mortgage loan criteria, your application could still be rejected for a multitude of different reasons; even a small form error could put your application in jeopardy of rejection.
We’ve listed five top tips to get your mortgage loan approved the first time you apply.
Table of Contents
Improve Your Credit Score
Before you start house hunting with Vermont Real Estate, it’s essential to check your credit score.
Ideally, you should have a current credit score of 600 or above; anything under 600 will likely see your application rejected.
If your score is lower than what it should be, you will need to work towards improving your score; you can do this by paying all your bills on time, reducing your debt, and being savvy with credit.
And remember, you must also monitor your score regularly.
20% Down Payment
It’s fundamental to have a 20% down payment when applying for a mortgage loan; you must have 20% of the loan amount saved.
The down payment amount serves as surety for lenders.
But beyond this, it will also reduce your total mortgage debt, so it’s wise to have a down payment either way.
Set A Realistic Budget
If you receive pre-approval from a lender, you’ll probably be surprised to see the approval amount is high.
However, it’s essential to stick to your budget in this case, as your pre-approval amount is typically higher than the amount you will receive approval for.
Create a realistic budget before applying and stick to this amount regardless of how much more a lender is willing to give you.
When creating a realistic budget, consider the extra hidden costs of homeownership, like utilities, property taxes, property maintenance, and others.
Shop Around for The Best Deal
Shopping around might not get your loan approved, although it is the best way to ensure you are getting a good deal.
Getting the best possible rates will certainly help with your finances.
A mortgage loan will take about 30-35 years to pay off, so it’s wise to shop around to get a great deal on interest.
Prep All Your Documents
You’ll need quite a few documents on hand when applying for a mortgage loan.
These documents include your credit report, tax returns, pay stubs or proof of income, identification documents, and other documents like homeowners’ insurance.
Gather these documents beforehand to prevent slowing the process of applying for a mortgage loan.
In addition, it’s also worthwhile to use a mortgage loan calculator to determine your affordability before applying to lenders.
Furthermore, it’s essential to only apply with 1-3 different lenders in one month, as excessive applications can drop your credit score.
With that said, if you aren’t too sure if you’re ready to buy a home just yet, it’s worthwhile to read through a few definitive signs that you are genuinely ready to buy a property.
Even though investing in real estate is often a life-long financial obligation, it is cheaper to own a property than what it is to rent, even with mortgage repayments.
