Without a mortgage, most Americans would be unable to afford their homes. As such, any renter looking to transition to the homeowner should take steps to make it attractive to mortgage lenders. Doing everything in your power to show lenders that you’re a safe bet can be a boon to your chances of home loan approval and your dreams of homeownership. So, if your ability to own a home is contingent upon obtaining a mortgage, consider the following pointers. These will go a long way towards achieving your goal.
Consistently Meet Your Financial Obligations
Unsurprisingly, many lenders are drawn to borrowers who consistently meet their financial obligations. Such sort of borrowers never causes any anxiety to the lenders. If you regularly pay your bills on time, never have debts sent to collections and have built a favourable credit score, there’s a good chance that mortgage lenders will view you as a safe bet. So, if you’ve been less than timely with honouring your financial obligations, you’ll need to correct this before you begin submitting mortgage applications. Paying off any bills that have been sent to collections and staying current with various other monthly expenses will show lenders that you have a strong sense of financial responsibility and make them more apt to take a chance on you. Virginians interested in purchasing homes would do well to regularly meet their financial obligations before searching for Virginia Beach mortgage lenders.
Pay Down Outstanding Debt
It shouldn’t come as a shock that lenders tend to favour borrowers who aren’t saddled with a mountain of debt. Copious debt creates the impression that a borrower cannot make sound financial decisions, thus prompting many lenders to think twice about approving their loan applications.
So, if you’re currently living with excessive amounts of debt, make sure to get a handle on the problem before applying for a mortgage loan. This may mean waiting longer than you’d like to start submitting applications, but your patience in this matter stands to increase your chances of loan approval exponentially. When you apply, the less debt you have, the more attractive lenders will find you. Having the lowest possible debt-to-income ratio will prove tremendously helpful in this endeavour.
Furthermore, it would help if you abstained from submitting loan applications immediately after paying down outstanding debt. Instead, take care to wait a little while and give your credit score time to recover. Otherwise, you may get hit by your extra impatience in this context. The lenders might think that you have retired your outstanding debt only to be eligible to apply for the following loan.
Have a Steady Source of Income
Many lenders won’t hesitate to reject applications from borrowers who lack a steady source of income. This doesn’t necessarily mean you’ll need to have a traditional job. For example, if your income comes from a pension, trust fund or investment portfolio, some lenders will be willing to work with you. In short, an applicant with a vital source of income is more likely to get his loan application approved.
Still, for most of us, gainful employment and steady income are synonymous. So, when applying for a mortgage loan, be prepared to show lenders proof of employment and income. The more money you make, the safer lenders are likely to approve your application. In addition to showing them that you’ll be able to afford your monthly mortgage payments comfortably, a steady income will also ensure that you’re well-equipped to deal with home insurance, property taxes and other expenses synonymous with homeownership.
Offer Up a Large Down Payment
A large down payment can prove beneficial in two key areas. For starters, it will help increase your odds of loan approval, as it will show lenders that you’re serious about buying a home and illustrate a certain level of financial security. Secondly, a sizeable down payment stands to reduce the cost of your monthly mortgage payments. After all, the more money you put down, the less you’ll need to pay off over time. Anyone looking to reduce their monthly payments right from the get-go should put the most significant down payment on their home.
Mortgage loan approval is the one thing standing between countless Americans and homeownership. So, when it comes time to start submitting loan applications, you’d do well to go in prepared. The more confidence you’re able to instil in lenders, the more loans you’re likely to be approved for – and the better the terms of those loans are likely to be. If this is your first time trying to wow mortgage lenders, don’t submit any applications before doing the necessary homework and considering the pointers discussed above.